Indonesia Plans Third Dollar Sale in 2013 as Credit Risk EasesDavid Yong
Indonesia is preparing to sell dollar-denominated bonds for a third time this year as credit risk in the region eases from a six-week high.
The Southeast Asian government hired banks to arrange investor meetings from Aug. 23 and a sale of Shariah-compliant notes may follow, a person familiar with the matter said today. Indonesia sold $1 billion of notes due 2023 last month and $1.5 billion each of 10- and 30-year securities in April, Bloomberg data show. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan is on track to retreat from a 157.7 basis-point close yesterday, the highest since July 10.
“The timing is a bit difficult right now because markets are under pressure,” said Dastin Mudijana, the Jakarta-based head of fixed income at PT Trimegah Asset Management. A private placement “would be one option, instead of going directly to investors.”
Indonesia last sold U.S. currency Islamic debt in November, when it borrowed $1 billion selling 10-year notes. The 3.3 percent securities have lost 22 percent this year through yesterday, data compiled by Bloomberg show.
Meetings to market the latest offering will be held in London on Aug. 23, followed by Jeddah, Saudi Arabia on Aug. 25 and then Abu Dhabi and Dubai on Aug. 27, the person familiar with the matter said, asking not to be identified because the details are private.
Elsewhere in Asia’s dollar bond market, developer Franshion Properties China Ltd. raised $200 million by placing notes due 2022 with Goldman Sachs Group Inc., according to a stock exchange announcement.
Hong Kong-based miner Winsway Coking Coal Holdings Ltd. announced a tender offer to buy back its 8.5 percent notes which mature in April 2016. The $500 million of bonds, sold to investors at par in April 2011, were trading at 35.53 cents on the dollar yesterday, yielding 60.3 percent, Bloomberg-compiled prices show.
The Markit iTraxx Asia index dropped 4.5 basis points to
155.5 basis points as of 8:44 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The measure is poised for its biggest one-day fall since Aug. 5 and its lowest close since Aug. 19, according to data provider CMA.
The Markit iTraxx Australia index slid 3 basis points to 124 as of 10:26 a.m., according to Westpac Banking Corp. The index is on course for its first decline since Aug. 14 and its lowest close since Aug. 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index fell 2 basis points to 98 basis points as of 9:25 a.m. in Tokyo, Citigroup Inc. prices show. The index is also on track for its lowest close since Aug. 19, according to 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.