Photo: Siemens Gamesa and Vena Energy wind farm in Jeneponto, Indonesia, on September 15, 2018. Shutterstock

Islamic Finance

Indonesia to issue retail green sukuk in November

JAKARTA – Indonesia’s government plans to sell a retail green sukuk in November as part of its commitment to meet increasing interest from younger and green investors, Dwi Irianti, director of Islamic finance at the ministry of finance told Salaam Gateway.

The sovereign last year issued a 1.47 trillion rupiah retail green sukuk at 6.75%.

Dwi Irianti expects the indicative amount of next month’s sukuk to be lower.

“The indicative amount will certainly be lower, around 1 trillion rupiah ($68 million) as we already secured and frontloaded our sukuk financing target this year. In fact, previously for retail sukuk SR013 issuance in September we received 25.6 trillion rupiah from an initial target of 2 trillion rupiah.”

The yield for the planned green sukuk will depend on market conditions, she added.

The offer period for the upcoming ST007 green issue will overlap with that of the retail cash waqf-linked sukuk that will end on November 12.

The government will appoint the same Islamic banks as distribution partners.

Indonesia’s government has so far issued $2.75 billion in sovereign green sukuk in the global market:

  • $1.25 billion in March 2018
  • $750 million in February 2019
  • $750 million in June 2020

The finance ministry’s 1.47 trillion rupiah retail green sukuk issued domestically in November last year was booked by more than 7,735 investors who were 51.07% millennials, according to the ministry of finance. The funds were channeled into environment-friendly projects including dams, irrigation, water and sanitation.

“For next year’s global and domestic green sukuk issuance timeline, surely we will adapt to market conditions,” said Dwi Irianti.

The sovereign green sukuk this year was planned for March but was delayed due to the uncertainties caused by the COVID-19 pandemic.

“We patiently waited for the next window, and in June we got a fantastic booking. It was oversubscribed and we were eventually able to reduce the price by 70 bps. So for next year, we will  wait for the best window and monitor issues such as the USA election etc,” she said.  

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim

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