Republic of Indonesia US$2.5 billion ten-year bonds

Joint bookrunners: Deutsche Bank, J.P. Morgan, UBS

The Republic of Indonesia (RoI) demonstrated its new-found sophistication as a sovereign bond issuer when it priced on April 17 a US$2.5 billion offering for ten years, which generated robust investor demand.

The Reg S/144A notes were priced at a yield of 5.1% with a coupon of 4.875% – the lowest yield and coupon ever for any ten-year US dollar bond of the RoI. It was a well-executed transaction with the sovereign changing its strategy from the previous bond forays.

It met investors via a non-deal roadshow format instead of immediately announcing a deal following the marketing process to allow the secondary bond prices to settle and achieve a much tighter trade.

The RoI held a series of credit investor meetings in the middle of March in Zürich, London, Boston and New York, but strategically decided to wait for a more optimal issuance window as market conditions turned volatile following the unrest in the Middle East, the earthquake in Japan and the ongoing debt concerns in Europe.

It eventually announced the deal in the morning of April 26, and the order book of US$6.9 billion allowed the RoI to print a trade higher than the initial market expectations of US$2 billion.

It also just paid a new issue premium of only 9bp over the RoI interpolated US dollar yield curve, lower than what the recent emerging market sovereign issuances had achieved.