Bond Market News

The Republic of Indonesia (Baa3/BBB-/BBB-) priced US$4 billion in bonds yesterday, adding to the record high over US$300 billion in Asia ex-Japan dollar issuance so far this year.   The senior unsecured notes were SEC-registered for the first time in more than 20 years for the sovereign, and were issued in 3 tranches of US$1 billion in 5-years at a yield of 3%, US$1.25 billion in 10-years at a yield of 3.55% and US$1.75 billion in 30-years at a yield of 4.4%.

This is Indonesia’s second foray into the offshore markets since being upgraded earlier this year in May by S&P to BBB-, with a stable outlook, from BB+. Both Moody’s and Fitch have had investment grade ratings on the country for years, with Moody’s citing that its positive outlook reflects Indonesia’s reduction in its level of external vulnerability as well as ongoing policy reforms.

The Islamic Republic of Pakistan (B3/B/B) is another Asian sovereign that has come to the dollar markets in anticipation of the-widely expected rate hikes by the U.S. Federal Reserve later this month.  Struggling with political and economic turmoil, and seeking to pump up foreign-exchange reserves that have reportedly slumped 25%, the South Asian nation issued US$1.5 billion of 10-year notes at 6.875% and $1 billion of a 5-year sukuk at 5.625%, for a total of US$2.5 billion.  Pakistan received more than US$8 billion in orders, allowing it to price the 10-year conventional bond at a record low yield.