PHOTO
JAKARTA - Indonesia has raised $1.84 billion from the sale of bonds denominated in U.S. dollars and euros, IFR reported, with part of the proceeds to be used to fund the repurchase of outstanding dollar bonds in the country's first such offer.
The Southeast Asian country sold 10-year and new 40-year bonds in U.S. dollars, with the money to finance a tender offer for eight existing bonds that will come due between 2022 to 2026, Refinitiv news service IFR said on Tuesday.
The government has said it wants to buy back some of the outstanding bonds for as much as $1.25 billion in an offer that runs until Friday.
The repurchase offer was a first for Indonesia, according to Handy Yunianto, fixed income analyst for Mandiri Sekuritas, who said it appeared to be an effort to "reprofile its debts to reduce refinancing risks with longer-tenor bonds that lock at a now relatively low yield".
The shorter tenure dollar bonds carried a 2.18% yield, while the longer notes had a 3.28% yield.
Yunianto said the tender offer prices were set relatively in line with market prices, adding the strategy may be linked to expectations of tighter global liquidity and higher interest rates when the U.S. Federal Reserve begins tapering its pandemic-era asset repurchase programme.
The government also raised 500 million euros ($590.7 million) for its maiden sale of euro-denominated bonds specifically directed to fund its efforts to achieve sustainable development goals, IFR reported. The SDGs bonds, which will come due in 12 years, carried a 1.351% yield.
The head of the finance ministry's debt office did not immediately respond to a request for comment.
Indonesia's fiscal deficit has widened significantly since last year due to a spike in spending to manage the impact of the COVID-19 pandemic. Its central bank has been buying bonds directly from the government to help limit the rise in interest expenses for years to come. ($1 = 0.8465 euros)
(Reporting by Gayatri Suroyo Editing by Ed Davies) ((gayatri.suroyo@thomsonreuters.com; +622129927609; Reuters Messaging: gayatri.suroyo.thomsonreuters.com@reuters.net))