Indonesia's Danantara investment fund asks tycoons to buy low-yield 'patriot' bonds

Several Indonesian tycoons have agreed to buy into a special bond issuance that aims to raise up to 50 trillion rupiah (S$4 billion), the first offered by Indonesian sovereign wealth fund Danantara, according to sources with direct knowledge of the matter.

- Wahyudi Soeriaatmadja

JAKARTA -

The so-called patriot bonds are denominated in rupiah, have a coupon yield of 2 per cent and initially had a maturity period of more than 20 years. However, this was later negotiated to five- and seven-year tenors, a senior Danantara official told The Straits Times on Aug 25.

Bloomberg reported that Danantara seeks to issue the debt in five- and seven-year parts at 25 trillion rupiah each on Oct 1.

Both tranches of the patriot bonds offer below-market yields. In comparison, Indonesia's benchmark five-year and seven-year sovereign bond yields currently stand at 5.9 per cent and 6.16 per cent, respectively.

"The bond yield is at a friendly rate (to the issuer). It wouldn't have been called patriot bonds if it weren't so," said the Danantara official, who declined to be identified as he is not authorised to speak to the media.

The name of the self-styled "patriot" bonds hints at one's love for the country in support of the offering.

ST understands that among the tycoons participating in the private bond offering are those who own conglomerates that have stakes in sectors such as mining, palm oil, food and beverage, and real estate.