SINGAPORE • Higher returns compared to other Islamic
government bonds and the scarcity of new sukuk this year may lure
investors to Indonesia's first sale of international Shariah-compliant
debt since 2009.
The
South-East Asian nation, home to the world's largest Muslim population,
will sell a "maximum" US$1 billion (RM2.96 billion) of global sukuk in
the third-quarter (3Q), Finance Minister Agus Martowardojo said last
week.Indonesia's 8.8% Islamic bonds due April 2014 have returned 35% since they were first sold in April 2009, Royal Bank of Scotland Group plc prices show, compared to the average 29% return for government sukuk globally, HSBC/NASDAQ Dubai US Dollar Sukuk Index shows. (source)
Malaysia is the only country this year to issue global sovereign bonds that comply with Islam's ban on interest, attracting US$9 billion of orders from investors around the world for its US$2 billion offer in June.
Speculation Indonesia's credit rating will be raised to investment-grade level may also lure buyers to the sale, according to Asian Finance Bank Bhd, Union Investment Privatfonds and PT MNC Asset Management.
"This new Indonesian issue will gain from scarcity value and strong demand," Sergey Dergachev, who oversees US$8.5 billion of emerging market debt as a senior portfolio manager at Union Investment in Frankfurt, said in an interview on Aug 23. "Apart from Bahrain, Dubai, Malaysia and Indonesia, you don't find many sovereign sukuk out there."
Ras Al Khaimah, one of the seven sheikhdoms that make up the United Arab Emirates, sold US$400 million of global sukuk in December. Dubai last sold US$1.25 billion of Islamic debt in October 2009, while Bahrain offered US$750 million of sukuk in June of the same year. Indonesia attracted US$4.7 billion of bids for its debut US$650 million global Islamic bond sale.
Indonesia's Finance Ministry will select three underwriters to help arrange the sale of the bonds in Europe, Asia and the US, Minister Martowardojo said on Aug 23.
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