Indonesia Repurchases Global Bond Of IDR 16 Trillion: Saving On Debt Costs From Interest Expense

Illustration (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Finance (Kemenkeu) reports that Indonesia has bought back eight series of global bonds with a total value of USD 1.16 billion or approximately IDR 16.49 trillion (exchange rate of IDR 14.223).

Citing a press release from the Directorate General of Financing and Risk Management (DJPPR) of the Ministry of Finance, it was stated that the purchase value was decided after receiving the number of tender instructions received for the entire series which totaled USD 2.68 billion.

"This is a liability management transaction in the global market for the first time with a Tender Offer scheme to buy back eight series of global bonds owned by investors," said DJPPR, Tuesday, September 21.

It is said that liability management transactions for Government Securities in foreign currencies in the global market are part of the effort to manage the portfolio of State Budget financing instruments.

"In this transaction, the Government has succeeded in achieving the objective of implementing this liability management transaction, namely to extend the maturity profile of the global bond instrument and to save debt costs from reducing interest expenses, by taking advantage of market interest rates which are currently relatively low," said DJPPR.

As part of a series of liability management transactions, on September 13, 2021, the government claimed to have succeeded in pricing global bonds denominated in US dollars in the SEC Shelf Registered format.

The nominal global bond issued was USD 1.25 billion in two series, namely:

1. Re-tap on INDON 2.150% 07/28/2031 (series RI0731) amounting to USD 600 million.

2. New issuance for a 40-year tenor of USD 650 million.

This transaction is the tenth SEC Registered issuance in US dollars.

"In addition to the general purpose of financing the State Budget, the net proceeds from this issuance will be used to buy back a number of government global bonds through the Tender Offer transaction mentioned above," said DJPPR.

Meanwhile, the Joint Bookrunners and Joint Dealer-Managers in this transaction are BofA Securities, Citigroup, Crédit Agricole CIB, HSBC, and UBS.