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Indonesia’s bond market comes back to life

The Republic of Indonesia’s successful $2 billion issue this March has given an impetus to the revival of the country’s corporate bond issuance. Nick Parsons reports.

INTERNATIONAL INVESTMENT BANKERS are flooding back into Jakarta. It’s just like the old days.

Not so much the equity market hotshots – for few Indonesian companies want to get listed these days or do convertible bonds. And certainly not the syndicated loan bankers who used to finance a huge market before the 1997/98 crisis but are reluctant to lose their money again. But definitely the debt capital markets bankers – who see Indonesia as being at the forefront of the long-imagined Asian high-yield market.

“In the international capital markets at the moment, Indonesia is in a sweet spot,” says Suresh Narang, chief country officer and head, global markets, at Deutsche Bank in Jakarta. “There is a high degree of convergence – you have the need for capital and the willingness to provide it.”

Indonesia was regarded as a pariah back in 2002 but there has been a fundamental change in that perception. Narang says: “It is now seen as a stable place to invest, at least in financial instruments – international bonds, rupiah government bonds, structured finance – and that is usually a precursor to the resumption of foreign direct investment.”

The message is clear: Indonesia is back – its corporates are in expansion and acquisition mode; they have been fully restructured and are prepared to leverage to finance capital expenditure plans.

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