Danantara Investment Management (DIM), an entity under Indonesia's sovereign wealth fund, successfully issued its debut U.S. dollar bonds, raising $1.5 billion. This amount was split evenly with $750 million in five-year bonds and $750 million in 10-year bonds. The five-year bonds were priced to yield 5.35%, while the 10-year bonds yielded 5.95%. Despite an initial target of $1 billion, robust demand, which peaked at approximately $4.6 billion, allowed Danantara to reduce the final yields by 35 basis points from initial guidance. This bond sale was a critical indicator of investor confidence in Indonesian assets amidst concerns about the rupiah's decline and President Prabowo Subianto's populist policies, as well as Danantara's expanding role in the economy. The bond issuance was launched by Prabowo in February 2025 and directly reports to him.
International investors showed strong interest, with U.S. investors purchasing 38% of the five-year tranche and 52% of the 10-year tranche. European, Middle East, and Africa (EMEA) investors acquired 41% and 31% respectively, while Asian investors bought 21% and 17%. Asset and fund managers were the largest buyers, taking 82% of the five-year bonds and 72% of the 10-year bonds, with insurers and pension funds accounting for 25% of the 10-year tranche. Analysts noted that investors seemed to focus on the implied government support due to Danantara's close ties with the Indonesian government, leading to pricing that was deemed reasonable, about 10 to 20 basis points above the Indonesian sovereign U.S. dollar bond curve.
Both Moody's Ratings and Fitch Ratings have assigned investment-grade ratings to Danantara's proposed U.S. dollar notes. Moody's assigned a Baa2 rating to DIM's proposed notes, aligning it with Indonesia's sovereign rating due to strong credit linkages and the expectation of timely government support. Fitch assigned a 'BBB' rating to the senior unsecured U.S. dollar bonds, consistent with DIM's Issuer Default Rating, also citing strong government incentives for support. Both agencies have a negative outlook on these ratings, mirroring the negative outlook on the Indonesian government's sovereign rating. Danantara plans to use the proceeds for general corporate purposes, including investments and refinancing existing debt. The company also has access to $10 billion in revolving credit facilities and has raised IDR 68.4 trillion through Patriot Bonds.
