Pursuing its offshore funding diversification strategy, the Republic of Indonesia ( RoI ) priced on October 23 its inaugural offshore renminbi bond offering amounting to 6 billion yuan ( US$841.50 million ) in one of its most active funding forays in the international debt capital markets in years. In doing so, the RoI joins a plethora of other issuers drawn into this market on the back of cheaper financing costs.

The SEC-registered, dual-tranche issuance included a five-year bond amounting to 3.5 billion yuan, which was priced at par with a similar interest rate and re-offer yield of 2.50%. The yield was 45bp tighter than the initial price guidance of 2.95% area. The other tranche was a 10-year bond amounting to 2.5 billion yuan, which was also priced at par with a similar interest rate and re-offer yield of 2.90%. This was 40bp tighter than the initial re-offer yield guidance of 3.30% area.

The maiden offshore renminbi transaction generated a robust investor demand with the order book amounting to over 22 billion yuan. Such market response – which was also noted in previous transactions – came amid recent social unrests caused by announcements of increases in housing and other allowances for the Indonesian parliamentarians that resulted in a cabinet reshuffle.

The latest deal adds to the sovereign’s further funding diversification drive and greater participation in the regional bond markets. In August, it accessed the Australian dollar bond market for the first time, printing an A$800 million ( US$519.50 million ) Kangaroo bond. The dual-tranche issuance consisted of a five-year bond amounting to A$500 million and a 10-year bond amounting to A$300 million. Both tranches also achieved tighter pricing on the back of strong investor demand with the order book reaching about A$8 billion.

The CNH bonds are drawn under the RoI’s US$10 billion shelf programme with the proceeds to be used for general budgetary purposes. Bank of China ( Hong Kong ), HSBC and Standard Chartered were the joint lead managers and underwriters for the transaction.

Including the Kangaroo bond, the CNH bonds marked the sixth time the sovereign has tapped the offshore debt markets this year, raising over US$10.4 billion. Four of the transactions were done in the G3 bond space, with the last trade printed in October – a dual-currency, multi-tranche offering amounting to US$2.55 billion equivalent. It comprised US$600 million for 5.5 years, US$1.25 billion for 10.5 years, and €600 million ( US$698 million ) in SDG ( Sustainable Development Goals ) bond.