Indonesia Joins Rush to Dollar Bond Market to Beat Rising Rates

(Bloomberg) -- Indonesia’s government is marketing a new 40-year dollar bond, and at the same time seeking to increase its existing 10-year notes as it joins the rush of borrowers looking to lock in funds before rates rise. 

Issuers are piling into debt, with record amounts of bonds being priced globally. That’s as the specter of inflation hovers over markets after a jump in some measures of U.S. August producer prices and as investors are trying to judge when central banks will start to pull back support.

Like many countries, Indonesia, once a hotspot for the coronavirus, has been spending billions of dollars to prop up its economy from the fallout of the pandemic. Proceeds from the bond sale would help the government to buy back as much as $1.25 billion of its dollar debt due between 2022 and 2026, a person familiar with the matter said. 

“The strategy may be to secure longer-term funds before yields rise, in view of expected withdrawal of excessive stimulus by some major global central banks,” said Frances Cheung, a rates strategist at Oversea-Chinese Banking Corp. in Singapore.

The move will extend the average maturity of Indonesia’s debt, said Winson Phoon, head of fixed-income research at Maybank Eng Kim Securities Pte Ltd. The rare tap of its existing 10-year notes will also improve liquidity.

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