The Republic of Indonesia (RoI) took advantage of a constructive issuance window and priced a dual-currency bond offering totalling US$2.24 billion equivalent, and in the process, achieved tighter pricing amid a big spike in Covid-19 cases in the country. The sovereign adopted a different market approach as it reopened a couple of its outstanding long-tenor US dollar bonds in its latest fund raising.

The SEC-registered deal comprised of new 10-year bond amounting to US$600 million, which was priced with a coupon of 2.15% to yield 2.20%. The tap of the 30-year bond raised US$750 million and was priced at 99.031% to yield 3.10%, while the tap of the 50-year bond raised US$300 million and was priced at 99.995% to yield 3.35%. Each of the tranches was priced in line with their final price guidance, and each achieved a 35bp compression from their initial price range to re-offer yield.

The final pricing enabled the sovereign to achieve tighter credit spread compared to the transaction priced in January this year across all three US dollar tranches – notching its tightest-ever spread for the respective tenors. RoI achieved the record low US dollar yield of 3.35% on the 50-year tap issue, while the 30-year tap offering was priced flat to the original 3.05% notes despite a 26bp increase in the US treasury benchmark rates.

The issuance represents RoI’s ninth SEC-registered shelf issuance in US dollar, demonstrating its continued commitment to enhance the secondary liquidity pool of its tradable securities available to US and global investors.

Meanwhile, the euro tranche amounting to €500million (US$588 million) for eight years was priced at a spread of 122bp over mid-swap and a coupon of 1%. This was 28bp inside the initial price thought of 150bp and achieved a negative new issue concession on the back of strong demand from European accounts. The latest euro bond marks RoI’s fifth euro offering in the SEC-registered format, reflecting as well its consistent efforts to deepen the secondary liquidity pool of its euro-denominated tranche tradable securities available to European investors.

Capitalizing on strong investor sentiment and broadly constructive US market session overnight, RoI proceeded to announce the transaction during the Asia morning of July 21 to access both the US dollar and euro bond markets in a swift and opportunistic manner for its second issuance of the year.

The US dollar tranches garnered a combined order book of US$4.7 billion, with the new 10-year bond attracting demand of US$2.1 billion from 69 accounts, the 30-year tap US$1.7 billion from 67 accounts and the 50-year tap US$900 million from 46 accounts.

The net proceeds from the bond offering will be used for general purposes, including the financing of Covid-19 relief efforts. BNP Paribas, BofA Securities, Credit Agricole CIB, Deutsche Bank and HSBC were the joint bookrunners for the transaction, while PT BRI Danareksa Sekuritas and PT Trimegah Sekuritas Indonesia acted as co-managers.