Indonesia’s $1.5-billion sukuk receives huge order book

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KXIORMDE4PIndonesia launched an Islamic bond on September 2 after ramping up interest for the dollar sukuk for more than a month, making it one of the first debt issuers since the summer.

The $1.5 billion 10-year sukuk obtained an order book of more than $10 billion from nearly 400 accounts, according to a source close to the deal. The source added that this is one of the largest order books received for an international Islamic bond issuance.

As a result, the country was able to tighten pricing, resulting in a final outcome of 4.35 per cent. On a curve adjusted basis, its existing Islamic bond expiring in 2022 was trading at a yield of 4.15 per cent prior to announcement. Fair value for the new bond would be 4.35 per cent, indicating that it priced flat to its existing sukuk curve.

Additionally, the sovereign’s new Shariah-compliant bond priced inside its 10-year conventional bond which launched at 5.95 per cent in early January.

The US 10-year yield was at 2.43 per cent on September 3, according to Bloomberg data, much lower than the near 3 per cent levels seen in January.

The last time Indonesia tapped the sukuk market was in September 2013, when it issued a $1.5 billion 5.5-year bond, which obtained a total order book of $5.7 billion from 290 accounts.

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Reading Time: 1 minute

Indonesia launched an Islamic bond on September 2 after ramping up interest for the dollar sukuk for more than a month, making it one of the first debt issuers since the summer.

Reading Time: 1 minute

KXIORMDE4PIndonesia launched an Islamic bond on September 2 after ramping up interest for the dollar sukuk for more than a month, making it one of the first debt issuers since the summer.

The $1.5 billion 10-year sukuk obtained an order book of more than $10 billion from nearly 400 accounts, according to a source close to the deal. The source added that this is one of the largest order books received for an international Islamic bond issuance.

As a result, the country was able to tighten pricing, resulting in a final outcome of 4.35 per cent. On a curve adjusted basis, its existing Islamic bond expiring in 2022 was trading at a yield of 4.15 per cent prior to announcement. Fair value for the new bond would be 4.35 per cent, indicating that it priced flat to its existing sukuk curve.

Additionally, the sovereign’s new Shariah-compliant bond priced inside its 10-year conventional bond which launched at 5.95 per cent in early January.

The US 10-year yield was at 2.43 per cent on September 3, according to Bloomberg data, much lower than the near 3 per cent levels seen in January.

The last time Indonesia tapped the sukuk market was in September 2013, when it issued a $1.5 billion 5.5-year bond, which obtained a total order book of $5.7 billion from 290 accounts.

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