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Indonesia Buys Back $467m in Bonds to Manage Refinancing

Jakarta last week announced the tender offer to buy back nine outstanding bonds that will mature between 2023 to 2027 for a maximum cash consideration of $500 million


Last year, Indonesia bought back $1.16 billion of US dollar-denominated bonds in its first ever tender offer for a global bond repurchase. Photo: Reuters.

 

Indonesia will repurchase $467.48 million worth of its US dollar-denominated bonds using proceeds from a recent global sale, the government said on Wednesday, with the aim to manage forthcoming refinancing risks.

Jakarta announced a tender offer last week to buy back nine outstanding bonds that will mature between 2023 to 2027 for a maximum cash consideration of $500 million.

This was funded by last week’s sale of new bonds with 10-year and 30-year maturity, worth $1.75 billion. The government has said the rest of the money will be used to fund this year’s fiscal gap.

Indonesia said, after reviewing offers, it would undertake acceptance of the tendered bonds on a pro-rata basis. It decided to accept offers to repurchase four notes, but did not take up bids for the other five.

“The liability management … is an effort to manage our portfolio actively to reduce refinancing risks and manage interest costs,” Deni Ridwan, the finance ministry’s director of government securities, said.

He declined to comment specifically on the transaction, but said the government has been doing the same thing for local currency bonds by holding debt switch auctions.

Last year, Indonesia bought back $1.16 billion of US dollar-denominated bonds in its first ever tender offer for a global bond repurchase, which analysts said could be in preparation for higher interest rates due to US monetary tightening.

  • Reuters, with additional editing by George Russell

 

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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