Sovereigns Turning to Debt Capital Markets to Launch Relief Programs
Sovereigns Turning to Debt Capital Markets to Launch Relief Programs
May 2020
The Republic of Indonesia recently issued USD4.3 billion in dollar-denominated bonds. The offer consisted of three tranches – a 50-year USD1 billion tranche, and a 10.5-year tranche and a 30.5-year tranche worth USD1.65 billion each.
This transaction includes the longest-dated dollar debt tranche issuance in Asia and represents Indonesia’s largest bond offering. In addition, the bonds are the first to be issued by a sovereign in Asia as a response to the COVID-19 crisis.
Portions of the proceeds from the bonds’ sale will help finance the Republic of Indonesia's COVID-19 fiscal stimulus and relief and recovery efforts to support Indonesian businesses and the overall Indonesian economy as the country absorbs the impact of the pandemic. To the extent that they support such goals, they will address or mitigate specific social issues and/or seek to achieve positive social outcomes for the general population of Indonesia affected by adverse effects of COVID-19. The Republic of Indonesia plans include support for healthcare, the social safety net, and small and medium enterprises.
"The longer-maturity tranches of this issuance and the specific earmarking of proceeds for fiscal stimulus, including social programs, highlights the important role debt capital markets can play in managing the impact of the COVID-19 crisis for sovereigns in Asia and beyond," said Kenneth Cheong, Head of Business Development and Corporate Trust for Asia-Pacific.
BNY Mellon Corporate Trust was appointed by the Republic of Indonesia as Trustee, Paying Agent, and Registrar for the issuance. BNY Mellon is a long standing service provider of choice for Indonesia’s sovereign debt, including their Global Medium-Term Note Program, their Islamic Global Medium-Term Note Program, and their U.S. shelf registration offerings.
"As the scope of the global pandemic became clear, our relationship, operations, and technology teams in APAC and around the world shifted seamlessly to remote working arrangements," added Cheong. "We already had extensive resiliency plans in place. As a result, we have been able to help our sovereign clients bring new offers to market quickly and effectively as they respond to rapidly-changing capital needs."