Indonesia returns for Dim Sum and euros
The Republic of Indonesia continued its borrowing spree on Wednesday with a Rmb9.25bn (US$1.3bn) triple-tranche Dim Sum and a €2.7bn (US$3.2bn) triple-tranche euro bond.
The sovereign had already printed a US$2.7bn three-tranche bond in January and, later that month, sent a request for proposals for a US$2.5bn–$3bn sukuk deal with five, 10 or 30-year tenors.
The rapid-fire issuance comes even as there are concerns about the country's widening budget deficit, which reached 2.92% of GDP last year, just below the legally allowed 3% limit and above initial targets.
The latest transaction comprised Rmb4.5bn 2.45% three-year, Rmb3.5bn 2.65% five-year and Rmb1.25bn 3.05% 10-year bonds priced at par, alongside €1.2bn 4.1% eight-year, €800m 4.46% 12-year and €700m 4.97% 20-year bonds. The euro bonds were sold at 99.973 to yield 4.104% or mid-swaps plus 150bp, 99.881 to yield 4.473% or 165bp, and 99.85 to yield 4.982% or 195bp.
The Dim Sum bonds were marketed at initial price guidance of 2.85% area, 3% area and 3.45% area. The initial price thoughts for the euro portion were mid-swaps plus 180bp area, 195bp area and 225bp area.
The new bonds showed little to no new issue premium. "The issuer was uber focused on pricing, which they always are," said a banker on the deal.
Indonesia is a long-established regular G3 borrower with both conventional and sukuk trades, and last year pushed itself further to debut in Australian dollars in August and offshore renminbi in October.
"Doing a follow-on Dim Sum was always on the table," said the banker. "The CNH market was relatively quieter in the first few weeks [of 2026] so it made sense to opportunistically look at the market at this point in time."
The euro portion was likewise opportunistic, as "the euro market has been on fire as well," said the banker. "It made sense to combine this with the CNH."
A banker on the January dollar deal said at the time that Indonesia had planned a euro portion alongside the dollar bonds, as the finance ministry had approval to raise up to US$4bn-equivalent. But it instead focused solely on the greenback piece, driving attention to a long 30-year tranche and helping it push for tight spreads on the five and 10-year portions.
The January deal raised slightly less than anticipated, but the combined US$4.5bn-equivalent raised on Wednesday was a surprise, as the market usually expects US$2.5bn–$3.5bn from an Indonesian outing.
"It's definitely the market technicals overall," said the first banker, explaining that the diversity of currencies brought in additional demand. "Indonesia is a name that the market has been receptive and supportive. There has been some noise on the macro front ... but the secondaries have been holding up."
President Prabowo Subianto's government has set ambitious growth targets and is spending big on social programmes. In September last year, respected finance minister Sri Mulyani Indrawati was replaced following protests across the country against perks for lawmakers.
Earlier this month, Moody's revised its sovereign rating outlook to negative from stable on "reduced predictability, which risks undermining policy effectiveness and points to weakening governance".
While this came up in investor conversations, it did not have a discernible negative impact. "The outcome yesterday speaks to that," said the banker.
A banker away from the deal noted the appeal of the long tenors in euros. "It shows strength of the market that a lower-rated investment-grade name outside of the eurozone can print at 20 years without a big NIP. An impressive achievement," he said, adding that other names could follow.
In a press release, the Indonesian ministry of finance said that the successful deal was "underpinned by the country's resilient economic fundamentals, [and] disciplined fiscal framework".
The proceeds will be used to finance the 2026 budget.
The SEC-registered notes will be rated Baa2/BBB/BBB, in line with the sovereign.
Bank of China, Deutsche Bank and HSBC were the joint bookrunners.
(Additional reporting by Burhan Khadbai)