Indonesia issues US$ 2.27b global green sukuk

The government has tapped into the global sukuk (Islamic bonds) market, recently issuing bonds worth US$ 750 billion with a five-and-a-half-year maturity period and a 10-year tenor of $1.52 billion, both of which were oversubscribed.

The sukuk will be registered in the Singapore Stock Exchange and NASDAQ Dubai in the United Arab Emirates, with a settlement period set at Feb. 20, the Finance Ministry’s directorate general of financing and risk management announced in a statement issued recently.

The yield of the five-and-a-half-year sukuk was penciled at 3.9 percent, while that of the 10-year sukuk was recorded at 4.45 percent, which was 25 to 30 basis points (bps) lower than its initial pricing guidance. The issuance was oversubscribed 3.8 times, reflecting a relatively high international investor demand for the instruments, the statement read.

“The transaction was also in line with the goal of Indonesia to strengthen the global sharia financial market as well as its commitment to environmentally friendly green financing,” the statement read.

More than half of the sukuk’s value was backed with state assets in the form of land and buildings as underlying assets, while 49 percent of the sukuk’s value was backed with ongoing or future infrastructure projects.

Deutsche Bank AG, Dubai Islamic Bank PJSC, Maybank Investment Bank Berhad, PT Mandiri Sekuritas and HSBC acted as green structuring advisors, joint-lead managers and joint bookrunners for the issuance of the sukuk.

Meanwhile, securities firm PT Bahana Sekuritas, PT Danareksa Sekuritas, and PT Trimegah Sekuritas Indonesia Tbk will act as comanagers for the transaction.

It marked the second time that the government banked on the global sukuk market after it became the first sovereign green sukuk issuer last year, which raised $1.25 billion. (bbn)