CIMB Investment Bank acted as the Joint Lead Manager and Joint Bookrunner for the U.S.$2.25 billion long 10-year and U.S.$1.25 billion long 30-year Senior Unsecured Fixed Rate Notes issued by the Republic of Indonesia.
The 10-year tranche was priced at 99.599% with a coupon and yield of 4.75% and 4.80% while the 30-year tranche was priced at 99.299% with a coupon and yield of 5.95% and 6.00%. The maturity dates are 8 January 2026 and 8 January 2046, respectively. Both the 10-year and 30-year tranche priced well below the initial price guidance of 5.000% area and 6.125% area, respectively.
Commenting on the transaction, Tengku Dato’ Sri Zafrul Aziz, Group Chief Executive of CIMB Group said, “We are pleased to be the only ASEAN bank appointed to lead this landmark transaction. The collective transaction is the largest issuance by an emerging market sovereign for the second half of this year. This appointment is a recognition of our expertise in the ASEAN debt capital markets and it speaks of CIMB’s ability to discover value even in the most difficult operating environments.”
Despite the lower issuance volumes expected in December, the Republic was able to attract interest from a wide range of high quality investors resulting in orders totaling an aggregate of U.S.$8.1 billion, resulting in an over-subscription of 2.3x. This is a testament to investors’ confidence and continued positive sentiment surrounding the Republic’s prospects on the back of a positive rating outlook by S&P and reaffirmed stable ratings from Moody’s and Fitch. The robust demand for the issuance allowed the Republic to pre-fund a substantial amount of its 2016 budget requirements and to further extend the Republic’s debt maturity portfolio ahead of important market events focused on imminent U.S. interest rate hikes.
The 10-year tranche was allocated over 164 accounts, while the 30-year tranche was allocated over 151 accounts. The order book was driven by diversified demand across the U.S., Europe and Asia. The 10-year tranche saw allocations of 62% to the U.S., 14% to Europe, 10% to Asia (ex-Indonesia), and the remaining 14% to Indonesia. By investor type, the split was 75% to asset managers, 18% to banks, 4% to insurance and pension funds, 1% to private banks and 2% to sovereign wealth funds. The 30-year tranche saw allocations of 50% to the U.S., 26% to Europe, 22% to Asia (ex-Indonesia), and the remaining 2% to Indonesia. By investor type, the split was 71% to asset managers, 6% to banks, 21% to insurance and pension funds, 1% to private banks and 1% to sovereign wealth funds.
The transaction is a draw down from the Republic’s U.S.$40 billion Global Medium Term Note Program updated as of 1 December 2015. The Notes settled on 8 December 2015 and were listed on the Singapore Stock Exchange and the Frankfurt Stock Exchange (Open Market).