Islamic Finance

Indonesia eyeing March global sukuk issue

JAKARTA -The Indonesian government may raise as much as $2.5 billion in a global sukuk sale in March, Suminto Sastro Suwito, Director of Sovereign Sharia Securities, Ministry of Finance, told Salaam Gateway.

According to Suwito, the Ministry of Finance is still finalizing underwriters for the sukuk sale, a process it started in early January when it announced it had barred U.S. bank JPMorgan Chase & Co. The selection process could take up to two months. The offering circular detailing terms and conditions as well as the due diligence process will follow.

“We can’t say what the final indicative nominal price is as we are now just in the preparation phase. We’ll consider the amount the state budget needs, and market appetite on issuance day. We see the first quarter, especially March as the right window,” he said.

He added that the government aims to maintain its state budget deficit at 2.41 percent to GDP this year. The government will tap the debt market for about 597 trillion Indonesian rupiah at gross, where 25 percent will come from the global market including through global sukuk issuance.

In March last year, Indonesia sold $2.5 billion in a dual tranche sukuk to the global markets. The first tranche was a $750 million 5-year sukuk at a coupon of 3.4 percent, while it will pay 4.55 percent for the $1.75 billion 10-year sukuk.

CIMB Investment Bank Berhad, Citigroup (B&D), Deutsche Bank, Dubai Islamic Bank, and Standard Chartered Bank were involved as joint lead managers and bookrunners on that transaction.

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