Indonesia sells Asia’s first 50-year dollar bond to fight pandemic

Indonesia’s coronavirus cases stood at 2,491 on Monday, with 209 confirmed deaths — the highest number of fatalities in Asia outside China. (Reuters)
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Updated 07 April 2020

Indonesia sells Asia’s first 50-year dollar bond to fight pandemic

  • Indonesia will use the cash raised to partially ‘fund its COVID-19 relief and recovery efforts’
  • The deal was carried out virtually, with bankers working on the transaction unable to travel to Jakarta

HONG KONG: Indonesia has raised $4.3 billion, including the longest-dated US dollar bond ever issued by an Asian nation, to help the government fund its battle against coronavirus, according to a term sheet reviewed by Reuters.
The deal was finalized in the United States on Monday and sold in maturities of 10.5 years and 30.5 years, worth $1.65 billion each, with a 50-year tranche worth $1 billion.
It was Indonesia’s largest-ever bond, according to the term-sheet which showed Indonesia will use the cash raised to partially “fund its COVID-19 relief and recovery efforts.”
The decision to sell 50-year bonds by the government came after initial conversations with potential investors found there was appetite for such a tenor, according to two sources with direct knowledge of the matter.
Asian life insurers, especially some based in Taiwan as well as US fund managers were the largest investors, the sources said. The sources could not be named because they were not authorized to speak to media.
“The mood in the market is starting to feel better, investors are starting to think we could be moving toward the end of the tunnel,” a banker working on the deal said.
The deal was carried out virtually, with bankers working on the transaction unable to travel to Jakarta which would have been normal practice.
Bankers working on the deal said the international travel ban put in place to control the coronavirus pandemic made the transaction more efficient to negotiate.
However, for syndicate bankers selling the deal to investors it was logistically more difficult because trading rooms in the major banks have been scaled back.
Indonesia’s coronavirus cases stood at 2,491 on Monday, with 209 confirmed deaths — the highest number of fatalities in Asia outside China.
Fifty-year bond deals priced in local currencies have been held in the past, Refinitiv data showed. South Korea raised 1.1 trillion won through a 50-year bond in September 2016 that at the time was worth $1 billion.
Indonesia’s government said on Monday it had raised its estimated 2020 net bond issuance to 549.6 trillion rupiah ($33.55 billion) to cover the country’s widening deficit.
It also listed a plan for sales of 449.9 trillion-rupiah ($27.47 billion) worth of “pandemic bonds” to cover additional spending for the COVID-19 response.
Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Standard Chartered were the joint book runners for the deal, the term-sheet showed.


Turkish Airlines may delay delivery of Airbus, Boeing planes

Updated 27 May 2020

Turkish Airlines may delay delivery of Airbus, Boeing planes

  • The carrier plans to begin some domestic flights on June 4 and international on June 10
  • Airlines chairman said the impact of the coronavirus on market could last up to five years

ISTANBUL: Turkish Airlines, which halted nearly all of its passenger flights as a result of the coronavirus crisis, may delay the delivery of some Boeing and Airbus planes, its chairman was quoted as saying on Wednesday.
The carrier plans to begin some domestic flights on June 4 and some international flights on June 10 as airlines worldwide try to get planes flying again after a global travel slump.
But Turkish Airlines chairman Ilker Ayci said in an interview with Turkey’s Hurriyet newspaper that the impact of the coronavirus could last up to five years and that it would take a while to reach 2019 load factor levels.
Turkish Airlines had received half of its order for 25 Boeing 787-9 planes, he said, adding that the delivery of the rest could be delayed.
The airline is in talks to take delivery of Airbus 350-900s that are ready from an order of 25, and that it was working to delay the delivery of the rest, he said.
“We are trying to lighten the serious loads that could arise. We are getting our narrow-body planes.”
Ayci said Turkish Airlines would no longer offer free in-flight food and drinks on domestic flights and other flights shorter than two hours.
He also repeated that the company would try to maintain employment, but that salaries would have to be adjusted, with the aim of supporting those paid the least.