For the first time in history, Indonesian government released 50-year dollar-denominated bonds to the global bond market, making it the first ever Asian nation to do so. The release is a part of $4.3 billion worth of bonds issued by the government to finance the $9.3 billion COVID-19 stimulus package. Speaking to the media, Finance Minister Sri Mulyani is well aware with the position of Indonesia to become the first-ever Asian country to issue sovereign bond since the COVID-19 outbreak early in February. She also added not a lot of countries are brave enough to enter global bond market due to its high volatility and turmoil.
The Singapore and Frankfurt Stock Exhange responded well to the sovereign bond release by the government. The sovereign bonds were able to attract investors and two times oversubscribed with a total bid of more than $10.9 billion. 5 major banks (HSBC, Citigrou, Standard Chartered, Deutsche Bank, & Goldman Sachs) got involved in the deal as the joint book-runners with two local brokers Danareksa Sekuritas and Trimegah Sekuritas as co-managers. The response also showed market confidence in Indonesia’s economy stable long-time growth.
$1.65 billion were raised out of the bonds (3.9% yield) due on the 15 October 2020, another $1.65 billion were also raised from the 30-year bond (4.25% yield) due on 15 October 2050 and the last $1 billion (4.5% yield) from 50-year bond due in 2070. Global rating agency Moody’s Investor Service rates the government’s sovereign bond with Baa rating, similar to Indonesia’s investment-grade rating with a stable outlook. Meanwhile, Standard and Poor’s Financial Services and Fitch Ratings assigned BBB rating, proving government’s effective policy on ensuring macroeconomic stability and increasing its resilience against any external shock.