hurricanemaxi
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 Posted: Tue Jan 10, 2012 5:12 am Post subject: Indonesia Raises $1.75B Amid Record Emerging-Debt Sales |
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Indonesia drew orders for double the $1.75 billion of 30-year dollar-denominated bonds it offered for sale, a sign of investor confidence in developing economies during a record start to a year for emerging-market debt issues.
Southeast Asia’s largest economy sold notes due January 2042 with a 5.25 percent coupon to yield 5.375 percent, attracting $3.6 billion of bids, the finance ministry said. The rate was 240 basis points more than that for similar-maturity U.S. Treasuries and the sale was arranged by HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc.
Developing nations and companies have already raised $25.9 billion in 2012, the most for the Jan. 1-9 period since at least 1999, according to data compiled by Bloomberg. Brazil, Mexico and the Philippines have sold global bonds this year even as European nations struggle to contain a debt crisis. Fitch Ratings raised Indonesia’s ranking by one level to BBB- in December as it lowered France’s rating outlook and put Spain and Italy on review for a downgrade.
“Those emerging-countries’ fiscal conditions are quite good, making it easier for them to issue and attract investors,” said Kenichiro Ikezawa, a Tokyo-based fund manager at Daiwa SB Investments Ltd. that oversees about $60 billion. “Indonesia just got upgraded by Fitch and of course, speculation is for others to follow suit eventually.”
PLUS Bhd., a Malaysian state-owned highway operator, leads emerging-market debt issuance this year, having sold 30.6 billion ringgit ($9.7 billion) of Islamic bonds globally.
Bond Returns
The extra yield (USGG10YR) investors demand to hold Indonesia’s 10- year dollar-denominated securities rather than similar-maturity Treasuries narrowed to 205 basis points from a two-year high of 324 basis points reached on Oct. 4. The average yield premium for developing nations’ debt was 379 basis points yesterday, down from a two-year high of 443 basis points on Oct. 4, according to an index (JPEMSOSD) compiled by JPMorgan Chase. The gap was 248 basis points at the start of last year.
Indonesia’s gross domestic product will increase 6.2 percent in 2012, according to the median forecast in a Bloomberg survey of economists. The central bank estimates growth accelerated to 6.5 percent last year from 6.1 percent in 2010. Consumer prices rose 3.79 percent in December from a year earlier, the least since March 2010, official data show. The budget deficit amounted to 1.3 percent of gross domestic product last year, President Susilo Bambang Yudhoyono said last week.
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