Indonesia raises $650 million in first-ever offering of global Islamic bonds April 21, 2009Posted by informationmedia in finance.
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Finance Ministry official Rahmat Waluyanto said the overwhelming response to the five year dollar-dominated sukuk — bonds that are structured to avoid paying interest in line with Quranic teachings — pointed to improved investor confidence.
Bids exceeded $4.6 billion but Indonesia was only able to accept the value of underlying assets, $650 million, said Waluyanto, adding he hoped the successful issuance would broaden the sukuk investor base on the international market.
He also hoped the sale — and possible future offerings — would “help cover our 2009 budget deficit.”
By issuing global Islamic bonds, the government of the world’s largest Muslim-majority nation also hopes to diversify its funding instruments.
The global Islamic bonds, sold Thursday and Friday, mature April 23, 2014 and pay a fixed 8.8 percent rate of return.
Middle Eastern and Islamic investors scooped up 70 percent of the bonds while buyers from the U.S. and Europe bought the remaining 30 percent, Waluyanto said.