Indonesia pays for peace of mind

摘要

The republic ofindonesia's first euro-denominated sovereign bond issue has underlined its determination to diversify its investor base even at a higher cost of funding relative to US dollars. Last Wednesday's €1bn (US$1.35bn) 2.875% seven-year bond issue, priced just a week before Indonesia elects a new president, drew an impressive response and attracted scores of new investors. Based on cross-currency swap rates, however, Indonesia paid a premium of about 25bp to its dollar secondary curve, showing that the government was prioritising speed and diversification over price. "They have issued a lot in the dollar market and they did a US$4bn deal in January, so it made sense for them to diversify," said a banker close to the transaction.