Sign up | Log in



March 13, 2009

Indonesia eyes $580m from global Islamic bond issue

Indonesia aims to raise about $580 million from its first global sharia-compliant bond issue this year, tapping a wider array of investors to fund its budget deficit, reported Reuters, quoting a finance ministry official.

The government, which launched a 73.3 trillion rupiah ($6.12 billion) fiscal stimulus package earlier this year in response to the global economic slowdown, has forecast a budget deficit equivalent to 2.5 percent of gross domestic product, pushing up its borrowing requirement.

It has already raised about two-thirds of its gross debt issuance target for 2009, but it still plans to tap a wider investor base using a broad array of debt instruments including a global sukuk issue.

"The main investors are expected from the Middle East. But certainly Asian investors as well," said Dahlan Siamat, the official in charge of Islamic debt at the ministry, adding that there was still investor interest in a global sukuk.

"It seems like many of the investors still have an interest (in the issue), for example, from Kuwait," Siamat said.

If demand for the sukuk is strong, the finance ministry will increase the size of the bond issue and use more of its assets to back it, he said.

Separately, Rahmat Waluyanto, treasury director general at the ministry, said the global sukuk would have a 5-year maturity.

Indonesia raised $3 billion last month in a heavily oversubscribed sale of 5-year and 10-year bonds thanks largely to the attractive premiums it offered.

Indonesia's global bond marked the biggest deal out of Asia excluding Japan since Hutchison Whampoa's $5 billion sale in November 2003, according to Thomson Reuters data.

The Indonesian bond sale attracted over $7.3 billion in orders, indicating that investors remain receptive to higher-yielding emerging sovereign debt. The global 5-year bond issue is currently yielding 10.095 percent.

The primary market for sukuk is still relatively thin, with the total outstanding volume of sukuk amounting to just $100.07 billion, according to Thomson Reuters data.

Islamic bonds are structured as profit-sharing or rental agreements, and their returns are derived from underlying physical assets such as real estate or commodities.

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited

submit your comment in the box below




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2019 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand