Alam Sutera Plans Dollar Bond as Indonesia Sovereign Mulls Sale

PT Alam Sutera Realty joined Indonesian companies planning dollar-denominated notes as the Southeast Asian nation’s government lines up an offering. Bond risk in Australia and Japan fell.

The Jakarta-based property developer hired Morgan Stanley and UBS AG to arrange fixed-income investor meetings, and a sale may follow the talks, said a person familiar with the matter, who asked not to be identified because the details are private. PT Pertamina Persero and PT Bank Rakyat Indonesia Persero Tbk, along with the Republic of Indonesia, are also planning deals.

Capital markets should be the main funding source for Indonesian companies instead of banks, Muliaman Hadad, chairman at the nation’s Financial Services Authority, said in January. Dollar offerings from Southeast Asia’s largest economy fell 59 percent to $1.1 billion so far this year from the same period in 2012, according to data compiled by Bloomberg.

“There has been a lack of supply from Indonesia,” said Brayan Lai, an analyst in emerging-market credit trading at Jefferies Group Inc. “Most of the issuers from that nation are probably hoping to ride on the back of the sovereign.”

Yield premiums for Indonesian dollar notes fell 19 basis points this month to 271.5 basis points more than Treasuries, according to HSBC Holdings Plc indexes.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 101.5 basis points as of 9:04 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc prices. The measure is set for its lowest close since January 2011, CMA data show.

Bond Risk

The Markit iTraxx Japan index decreased 0.5 of a basis points to 101.8 as of 9:23 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark had fallen 20.4 basis points this month through yesterday, according to CMA, which is owned by McGraw- Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index dropped 2 basis points to 104 basis points as of 11:19 a.m. in Sydney, Westpac Banking Corp. prices show. The last time the gauge closed below that level was in May 2011, according to data provider CMA.

Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.

The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.

To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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