Indonesia to Sell Unguaranteed Samurai Bonds to Japanese Investors Soon
The Finance Ministry of Indonesia started to market multi-tranche Samurai (yen-denominated) bonds, partially without guarantees from the Japan Bank for International Cooperation (JBIC), a Japanese public financial institution. It will be the first time that Indonesia issues unguaranteed Samurai bonds and thus the result will inform how confident Japanese investors are in Indonesia’s debt markets. Previously, all Samurai bonds issued by the Indonesian government were guaranteed by JBIC.
The unguaranteed Samurai bonds are fixed-rate tranches of three and five years, marketed at 85bp-90bp and 108bp-115bp over yen offer-side swaps, respectively. These notes are yet to receive a rating from Moody’s Investors Service and Fitch Ratings but the ratings are expected to be in line with the country’s sovereign credit rating. Recently, Moody’s and Fitch affirmed Indonesia’s Baa3 and BBB- sovereign rating, respectively.
The ten-year fixed bonds are guaranteed by JBIC, therefore rated higher at A1 (Moody's) and AA- (Standard & Poor’s), and are being marketed around 26bp-27bp.
The sale of the notes, which are expected to price on Tuesday (4 August 2015), is managed by Mizuho, Nomura and SMBC Nikko.