Indonesia’s Danantara unit raises US$1.5 billion as debut US dollar bond draws strong demand

[JAKARTA] A unit of Indonesia’s sovereign wealth fund Danantara raised US$1.5 billion in its debut US dollar bond sale, drawing strong global demand in a closely watched test of investor appetite for the country’s assets in a period of market stress.

Danantara Investment Management sold US$750 million in five-year bonds and US$750 million in 10-year bonds, a term sheet seen by Reuters early on Friday (Jun 12) showed.

The order book peaked at around US$4.6 billion, Danantara said on Friday.

It indicated “strong confidence” from international finance markets that it said should also bolster confidence among domestic investors towards its institutional framework.

Reuters reported on Thursday, citing three sources, that Danantara was looking to raise about US$1 billion, split equally between the two maturities.

The five-year bonds were priced to yield 5.35 per cent, while the 10-year bonds were priced to yield 5.95 per cent. The robust demand allowed the company to lower final yields by 35 basis points from initial price guidance.

Winson Phoon, a fixed income analyst at Maybank in Singapore, said the transaction was “a decent print”, given domestic headwinds and Danantara’s limited track record as a relatively new name.

“Ultimately, its strategic importance to the administration carries more weight,” he said, adding that pricing appeared reasonable at around 10 to 20 basis points above the Indonesian sovereign US dollar bond curve.

Final allocation details seen by Reuters showed the five-year tranche drew more than US$1.45 billion in orders, including US$175 million of joint lead manager interest, from 68 accounts.

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US investors bought 38 per cent, while European, the Middle East and Africa (Emea) investors purchased 41 per cent and Asia, 21 per cent. Asset and fund managers took 82 per cent of the tranche.

The 10-year tranche drew more than US$1.35 billion in orders, including US$240 million of joint lead manager interest from 63 accounts.

US investors bought 52 per cent, Emea 31 per cent and Asia, 17 per cent. Asset and fund managers took 72 per cent, while insurers and pension funds took 25 per cent.

Key test of foreign investor appetite

The sale was a key test of foreign investor appetite for Indonesian assets at a time when investors are worried about a sharp fall in the rupiah, President Prabowo Subianto’s populist policies and Danantara’s widening role in the economy.

Bank Indonesia on Tuesday raised its benchmark interest rate by 25 basis points in a rare off-cycle move, lifting it to 5.5 per cent to help steady the rupiah after the currency hit a series of record lows.

Jakarta stocks have slumped 30.1 per cent year to date, while investors are awaiting a key MSCI review of Indonesia’s market accessibility due later this month.

Andrew Wong, managing director of credit research at OCBC, said investors appeared focused on “the probability of implicit support, given Danantara’s close linkage with the government”.

Danantara was launched by Prabowo in February 2025 and reports directly to him.

Danantara Investment Management will use the proceeds for general corporate purposes, including investments and refinancing existing debt, the term sheet showed.

Citigroup, DBS, HSBC, Mandiri Securities and Standard Chartered were joint bookrunners and joint lead managers for the deal. REUTERS