Danantara seeking 50 trillion rupiah in bonds from ‘patriot’ investors
Indonesia’s sovereign wealth fund has reported US$1 trillion in assets under management, and oversees nearly 900 state firms
[JAKARTA] Indonesia’s newly established sovereign wealth fund has sounded out investors on a plan to raise 50 trillion rupiah (S$3.9 billion) by selling so-called patriot bonds at below-market yields, sources familiar with the matter said.
Danantara seeks to issue the debt in five- and seven-year parts at 25 trillion rupiah each on Oct 1, according to sources briefed on the plan who asked not to be identified as the discussions were confidential. Both tranches would carry a 2 per cent coupon, according to a document seen by Bloomberg News that also confirmed other details.
That’s less than half the central bank’s benchmark interest rate and the yields on comparable government bonds, which stand at 5.8 per cent and 6.1 per cent respectively.
Danantara’s move appears to be a bet that wealthy investors and institutions would be willing to accept a lower interest rate to show support for the fund, which reports directly to Indonesian President Prabowo Subianto. Set up earlier this year, Danantara has reported US$1 trillion in assets under management, and oversees nearly 900 state firms. That would put it among the world’s largest sovereign wealth funds and makes it key for goals of returning the economy to 8 per cent growth levels posted in the 1990s.
Mandiri Sekuritas would manage the sale.
Danantara could not be reached for comment. Mandiri declined to comment.
Given the significantly low yields, the patriot bonds would be sold through a private placement, the sources said. The wealth fund held meetings with dozens of potential investors over the past few weeks where it pitched the deal and said the proceeds would go to Danantara’s waste-to-energy projects, they said.
No documents have been signed and terms of the deal could still be revised, they added.
The bond proposal marks the latest move by Danantara to raise funds as it gears up to invest in domestic and overseas endeavours. The fund has collected an estimated US$7 billion in dividends from state-owned enterprises that have been shifted under its supervision. It also said last month that it won approval for a US$10-billion unsecured revolving loan from foreign banks. BLOOMBERG
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