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Treasury & Capital Markets
Indonesia leads Asia G3 bond issuance with blue notes
ICBC prices carbon neutrality-themed green notes while OCBC Bank raises bank capital
The Asset 20 May 2024

The Republic of Indonesia (RoI) led the issuance activity in Asia G3 bond market last week with its largest offering of Samurai bonds in multiple tranches totalling 200 billion yen (US$1.28 billion), including blue bonds.

The sovereign sold four tranches of conventional Samurai bonds, including 50 billion yen of three-year bonds with a coupon of 0.99%, 88 billion yen of five-year bonds with a coupon of 1.33%, 17.7 billion yen of seven-year bonds with a coupon of 1.57%, and 19.3 billion yen of 10-year bonds with a coupon of 1.91%.

RoI also issued a total of 25 billion yen of blue bonds in three tranches, pricing seven-year notes with a coupon of1.57%, 10-year notes with a coupon of 1.91%, and 20-year notes with a coupon of 2.55%.

Proceeds from the conventional bonds will be used to finance this year’s budget deficit, while the proceeds from the blue bonds are earmarked specifically for maritime-related projects. The bonds were issued under RoI’s 600 billion yen Samurai shelf programme.

RoI previously tapped the Samurai bond market in May 2023 with a four-tranche issuance totalling 104.8 billion yen that included its inaugural blue bonds amounting to 20.7 billion yen – thus becoming the first sovereign issuer of publicly offered blue bonds in accordance with International Capital Market Association (ICMA) principles.

This is actually the RoI’s second fundraising this year, having kick-started the sovereign issuance in Asia when it priced on January 4 a triple-tranche offering totalling US$2.05 billion, including a 30-year tranche amounting to US$900 million.

Banks price G3 deals

Two regular bank issuers also printed deals in the G3 bond market last week, with OCBC Bank of Singapore pricing on May 13 a US$500 million 10-year non-call five-year tier 2 subordinated notes. The Reg S deal was priced at par with a similar coupon and re-offer yield of 5.52%.

The bond offering included a one-time issuer call option at par in year five, subject to regulatory approval. The interest payment is fixed for the first five years, and thereafter reset to the then prevailing five-year US treasury plus the initial spread, with no step-up.

The deal garnered a total order book in excess of US$4.1 billion from 220 accounts, with 84% of the bonds allocated in Asia-Pacific and 16% in EMEA. By type of investors, asset managers, insurance companies, pension funds, central banks and official institutions accounted for 80% of the paper, while the remaining 13% were sold to hedge funds and banks and 7% allocated to private banks, securities companies and brokers.

The Industrial and Commercial Bank of China (ICBC), through its different branches, priced on May 16 a multi-currency carbon neutrality-themed green notes totalling US$1.74 billion equivalent. The Hong Kong branch priced a US$1 billion Sofr (secured overnight financing rate) floating rate note for three years, while the London branch raised €300 million (US$326 million), also for three years with a coupon of 3.697% and a re-offer spread of 65bp over mid-swap. The ICBC Singapore branch, on the other hand, tapped the offshore renminbi bond market for its fundraising.

Other issuers are preparing to tap the G3 bond market with mandate announcements last week, including Shandong Hi-Speed Group of China. As per its announcement, the company mandated 40 banks as joint global coordinators, bookrunners and lead managers to arrange a series of fixed income investor calls commencing on May 20.

PT Krakatau POSCO, a leading steel producer in Indonesia, has mandated four banks to arrange fixed income investor meetings in Asia and Europe, also commencing on May 20, for a possible inaugural US dollar-denominated Reg S only bond offering, subject to market conditions, with expected tenors of three years and/or five years.

Amid this activity, Asset Benchmark Research (ABR), the analytics unit of The Asset, is pleased to launch this year’s G3 Bond Survey. As the longest-running survey of its kind, it keeps track of the latest trends and the Best of the Sellside and the Most Astute Investors every year.

In addition to the annual survey, ABR is delighted to introduce a new function, available exclusively on The Asset App. The new service allows individuals on the buyside (Most Astute Investors) and the sellside (Best Sellside Individuals) to participate in the annual voting for the best performers in fixed income market on a real-time basis. Both the Best Sellside Individuals and the Most Astute Investors can keep track of the unweighted rankings and see who are the individuals trending in G3 bond markets.

For more information, please visit this link or email Asset Benchmark Research at [email protected].

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