By BLOOMBERG
Indonesia plans to sell dollar Islamic bonds, kickstarting 2016’s sovereign issuance after the poorest showing for global annual offerings in five years.
The deadline for proposals is next week and selections for the arrangers will be made before the end of January, according to people familiar with the matter, who asked not to be identified because the process is private. No details on the size and maturity were given. Suminto, Islamic financing director at Indonesia’s Finance Ministry, couldn’t immediately comment.
It’s the sixth straight year the Southeast Asian nation will have sold Shariah-compliant debt overseas and coincides with waning risk appetite across world markets driven by a selloff in Chinese shares. The government plans to issue as much as US$2 billion (RM8.79 billion) of global sukuk in 2016, Robert Pakpahan, director general for budget financing and risk management at the Finance Ministry, was citing as saying by Kontan in October.
“While it may not be the best time to issue, weighing against the risk of potentially higher dollar-funding conditions when the Fed tightens further, it could still be a better window of opportunity to tap the market now,” said Winson Phoon, a Kuala Lumpur-based fixed-income analyst at Maybank Investment Bank Bhd. “With some yield concession, I think there will be demand.”
The sovereign sold US$2 billion of 10-year dollar Islamic notes in May last year at a coupon rate of 4.325% and got US$6.8 billion in orders. The securities were paying 4.84% on Friday, compared with 4.96% at the end of 2015, data compiled by Bloomberg show.
Sales of global Shariah-compliant notes fell 30% last year to US$34.9 billion, the least since 2010’s US$19 billion, according to Bloomberg-compiled data.
— By Elffie Chew
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