JAKARTA, March 30 Indonesia's latest issuance of
U.S.-dollar denominated Islamic bonds attracted greater
investment from funds in the United States, an Indonesian
government official said on Thursday.
Southeast Asia's largest economy raised $3 billion this week
from a dual-tranche sukuk sale, the highest amount the country
has ever raised, said Robert Pakpahan, finance ministry's
director general of financing and risk management.
U.S. investors bought a total of $790 million of the 5-year
and 10-year Islamic bonds, which were priced at 3.4 percent and
4.15 percent, respectively.
In March last year, U.S. investors only subscribed to about
$277.5 million of the $2.5 billion sukuk sold by Indonesia,
according to government data. The 5-year sukuk was also priced
at 3.4 percent at the time, while the 10-year sukuk was priced
at 4.55 percent.
The rising interest from American investors came despite
Indonesia offering a smaller spread between its yield and that
of the U.S. treasury notes.
In the past 12 months, there have been two U.S. interest
rate hikes and three rate cuts in Jakarta.
"American investors became more convinced that sukuk is an
instrument they can trust with the same quality as the
conventional ones," Pakpahan said.
The Indonesian sukuk is now eligible for JPMorgan's EMBI
Global Diversified Index, Thomson Reuters' publication IFR
reported earlier this week, saying the change had prompted some
investors to buy in larger size and made it easier for others to
decide to participate.
Pakpahan said Indonesia will sell two more foreign
currency-denominated debts this year - in euro and yen. The
timing of each issuance would depend on many aspects, including
elections in a few European countries, he added.
Last month, Pakpahan told at an investor conference call
that the Indonesian government expected to sell a total of $5.5
billion worth of bonds to global markets this year, including
the U.S.-dollar sukuk.
(Reporting by Hidayat Setiaji; Writing by Gayatri Suroyo;
Editing by Sherry Jacob-Phillips)