Indonesia seizes brief window
Bonds Sovereign pre-funds 2019 needs during short-lived US-China trade truceBY FRANCES YOONThe REPUBLIC OF INDONESIA moved
quickly last week to sell a
US$3bn three-tranche bond
in a brief market window,
underlining its access to long-
term capital after a year of
emerging-market jitters.
Indonesia, rated Baa2/BBB–/
BBB, launched the offering of
five, 10 and 30-year bonds on
Monday, taking full advantage
of a rebound in market
sentiment following trade
talks between the US and
China over the weekend. The
timing was fortunate as market
turmoil returned later in the
week after the CFO of Huawei
Technologies was arrested inCanada on a US extradition
warrant.
The SEC-registered deal
comprised a US$750m 4.45%
February 2024, a US$1.25bn
4.75% February 2029 and a
US$1bn 5.35% February 2049
priced at 4.48%, 4.78% and
5.38%, respectively.
This marks the third year
running that Indonesia
has sold US dollar bonds in
December, opting to pre-fund
its budget for the coming
year to minimise market risk.
The successful trade relieves
funding concerns that had
come to the fore in the third
quarter, at the height of an
emerging market sell-off, when
the weakening rupiah and fallsin the prices of the country’s
outstanding US dollar bonds
had clouded the sovereign’s
prospects.
“Thanks to optimism from
US and China trade talks at
the G20, we had a strong open
in Asia on Monday, which
continued throughout the
Europe and US,” said a banker
on the deal. “It was a good time
to come, especially given that
the long end of the curve had
gained in recent weeks.”
Indonesia is also due to
hold presidential elections in
April 2019, which could add to
investor concerns and affect its
ability to come to market early
in the new year.
Although EM concerns havenot disappeared, the rupiah has
rebounded and the country’s
CDS has tightened 17bp since
November 20, according
to Refinitiv data, reflecting
improving sentiment.
“While Indonesia remains
quite vulnerable to broader
EM volatility and while
elections in April 2019 could
introduce some uncertainty in
the near-term, we view these
negatives as largely priced
into current valuations,” wrote
Nomura analysts in a recent
report. “Amid pressure on
the current account and IDR,
INDON/INDOIS (Indonesian
sovereign and sukuk sovereign)
valuations have also corrected
and, in our view, look fair at
present.”
After performing strongly
in recent years, Indonesian
spreads have widened this
year on risk aversion towardTencent Music gets sound demand
Equities Deal well covered despite challenging market conditions and premium price tagBY FIONA LAUThe US$1.2bn NYSE IPO of
TENCENT MUSIC ENTERTAINMENT,
China’s largest music-streaming
company, has built early
momentum despite challenging
market conditions and a
price range that puts it at a
premium to global peer Spotify
Technology.
The books were covered on
the first day of bookbuilding
last Tuesday, with demand
continuing to grow. As of
Thursday, the books were
multiple times covered,
according to people close to the
deal.
Tencent Music, which had
pre-marketed the float in
October with an eye toward
listing later that month, finally
set the ball rolling last Monday
with a public filing in the US.
The decision to move ahead
came after US President Donald
Trump and Chinese President
Xi Jinping on December 1
agreed to temporarily halt the
imposition of new tariffs, asthey work towards negotiating
a more permanent trade
agreement.
The news fuelled Asian
markets last Monday, with
Hong Kong’s Hang Seng Index
up 2.55%. Tencent Holdings,
the parent company of Tencent
Music, rose 4.1% to close atHK$324.80 on the day.
“The company had been
meeting investors in the past
few weeks and feedback was
positive. It feels it’s the right
time to press the deal ahead,”
said a banker on the deal.
Markets, however, turned
choppy as the week drewon, complicating Tencent’s
marketing efforts. The Dow
Jones Industrial Average
plunged 799.36 points on
Tuesday as investors cast
doubt on the vague Sino-US
agreement on trade while the
Treasury yield curve edged
towards inversion, signallingNews