Indonesia Leads The Way In Sovereign Securities

By Abdus Salam Muharam



In the world of sovereign securities, Indonesia has taken center stage in the past week with a flurry of activities. The government has been actively engaging in the sovereign securities market, showcasing its commitment to diversified financing options and Shariah-compliant instruments. 


Indonesia’s Cash Waqf-linked Sukuk Series SWR004


The Indonesian government has recently issued its cash Waqf-linked Sukuk series SWR004, marking a significant move in the sovereign securities market. This Sukuk series managed to attract IDR 112.56 billion (approximately US$7.39 million) in purchase orders during its offering period, which concluded on August 31, 2023. Notably, the Sukuk series has a two-year tenor, making it an attractive proposition for investors.


Sovereign Shariah Security Issuance


On August 29, 2023, the Indonesian government made another noteworthy move by issuing a sovereign Shariah security valued at IDR 321.14 billion (equivalent to US$21.07 million). This security carries a competitive 6.75% coupon rate and has a maturity date set for March 15, 2042. The issuance was conducted through private placement and was part of the Taxpayer Voluntary Disclosure Program, highlighting the government’s innovative approach to fundraising.


Auctioning of Sovereign Shariah Securities


Simultaneously, on the same day, the Indonesian government conducted auctions for several of its sovereign Shariah securities series. Notably, these auctions received a remarkable total of IDR 21.29 trillion (approximately US$1.4 billion) in bids, resulting in a realized amount of IDR 6 trillion (equivalent to US$393.63 million). These auctions underline the continued demand for Indonesia’s sovereign securities in the market.


Retail Sukuk Series


In addition to these significant developments, the Indonesian government has opened the offering period for its SR019T3 and SR019T5 retail Sukuk series. This offering will remain open until September 20, 2023. The SR019T3 and SR019T5 Sukuk series offer competitive coupon rates of 5.95% and 6.1%, respectively. These Sukuk issuances are strategically aligned with the government’s objective to finance the state budget, including vital infrastructure projects in Indonesia. Furthermore, they contribute to the expansion of the domestic investor base, further strengthening the country’s financial landscape.


Indonesia’s active participation in the sovereign securities market underscores its commitment to financial diversification and innovation. These recent developments not only serve as a testament to Indonesia’s growing influence in the world of sovereign securities but also pave the way for enhanced financing options and opportunities in the future.

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iBantu: Call to Action


As iBantu, an organization deeply committed to the principles of Islamic Finance, we urge all parties including governments, financial institutions, and investors worldwide to take inspiration from Indonesia’s pioneering steps in the sovereign securities market. These initiatives showcase the potential for innovation and growth within Shariah-compliant financial instruments. We call upon stakeholders to explore and embrace the possibilities that Islamic finance offers, fostering economic inclusivity and sustainability. By diversifying financing options and tapping into the global demand for Shariah-compliant investments, we can collectively contribute to economic resilience, infrastructural development, and a more equitable financial landscape. Let Indonesia’s progressive strides serve as a catalyst for further exploration and advancement in the realm of Islamic finance, benefiting nations and communities across the globe.


For the rest, learn about Islamic Finance by joining iBantu Academic.


Source: IFN

Indonesia Leads The Way In Sovereign Securities
ibantu, salamuharam April 29, 2024
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