The patient had endured years of severe pain and debilitating health complications due to the tumour
Indonesia is testing a sukuk market badly hurt by the global financial crisis and the slide in oil prices that dented the Gulf economies that serve as a crucial investor base for these products. A property downturn in cities such as Dubai have further led to the slowdown in issuance.
Southeast Asia’s top economy is now reviving a sukuk sale it initially targeted for late last year, hoping now that some confidence is returning to the market.
It would also be the first dollar-denominated sukuk sale this year, according to Thomson Reuters data. Bahrain is expected to price a $500 million dollar-denominated Islamic bond next month. [ID:nLF58464]
Indonesia’s finance minister, Sri Mulyani Indrawati, said on Thursday that the government received strong demand for its global sukuk but did not plan to increase the size of the bond given the value of the underlying assets.
“The underlying assets are worth a maximum of $600 million, thus it cannot be upsized despite strong appetite,” she told a news conference, adding “we will be able to give a further statement on this global sukuk when the offer period ends tomorrow.”
Global credit markets have improved this year, leading to a surge in conventional bond sales, while a prescription of interest rate cuts, support for financial systems and stimulus packages are also helping support the Gulf economies.
Indonesia on Thursday lowered price guidance for its five-year sale to 8.8-9 percent from the guidance at around 9.25 percent provided to investors on Wednesday, said the sources.
All three sources declined to be identified because they were not authorised to talk publicly about the transaction.
Indonesia closed its order book having attracted more than $4 billion in orders in its first such global bond sale, they said.
Orders came from the Middle East, as well as Islamic investors in Indonesia and Malaysia, said one of the sources who is working on the transaction. But he added the deal would have been more difficult without conventional debt investors.
“We have a host of conventional investors. The Middle Eastern market, as you know, is quite tough right now because of the dollar liquidity problems, and because governments need to support banks and property sectors,” he said.
The intended pricing for the sukuk compares with the 10.5 percent yield at which Indonesia sold a five-year conventional dollar bond in February. That debt has since rallied and was last trading at around 8.1 percent ID041536764.
Unlike conventional debt, sukuk pays returns derived from underlying assets, often in the form of assets such as real estate, given that Islamic law bans the payment of interest.
Indonesia’s sukuk issuance will adopt an ijarah structure, or a real estate sale and leaseback format between Indonesia and a special purpose company created by the government for the purpose of issuing these bonds.
Indonesia is getting closer to its full-year target of raising around 100 trillion rupiah ($9.15 billion) in a quest to plug a deficit estimated at 2.5 percent of its economy this year, having so far raised 73 trillion rupiah from domestic and overseas bond sales.
Barclays Capital, HSBC HSBA.L 0005.HK and Standard Chartered STAN.L are the lead managers for the sale.
The patient had endured years of severe pain and debilitating health complications due to the tumour
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