Komodo bonds
Supporting Indonesia’s economic development
A Komodo bond is the shorthand way of referring to global Indonesian rupiah (IDR) bonds. These are designed to help Indonesian state-owned enterprises (SOEs) finance infrastructure development plans, and to allow corporates to access large-scale foreign investment without foreign exchange currency risk.
Indonesia is one of the fastest-growing economies in the G20 and is an increasingly important destination for global investment flows. This positive outlook is in part driven by its significant investment in infrastructure development: according to the World Bank, Indonesia will need $500bn over the next five years to build roads, ports and bridges.
London Stock Exchange has become the leading centre for the issuance of Komodo bonds, building on the first bond issued on our markets in 2014.
A global centre of expertise
London provides access to the deepest pool of international capital in the world, and accounts for 70% of the secondary market turnover in international bonds.
With 22 [Note 1] active Indonesian rupiah-denominated bonds, London Stock Exchange is building on its leading position as the largest Komodo bond centre. Supranationals and large investment banks including Inter-American Development Bank, European Bank for Reconstruction & Development (EBRD), Barclays and HSBC have all chosen London for their repeat IDR issues, raising the equivalent of more than $2.2bn to finance operations in Indonesia. Raising capital in London ensures issuers are benchmarked against global comparables and are able to reach the broadest possible range of global investors globally.
International Securities Market (ISM) is an exchange-regulated market of LSEG, aimed at professional investors and tailored to issuers of debt securities. It is has been designed to provide issuers with an efficient and streamlined admission process. Indonesian issuers seeking admission to ISM need only liaise with LSEG.
Those issuers joining ISM benefit from London’s distinguished reputation, heritage and status. Due to its flexibility, ISM’s innovative Rulebook allows international issuers to utilise local GAAP accounting standards when producing financial disclosure.
A medium-term note (MTN) programme is an efficient way of listing debt securities. Under the umbrella of a single base prospectus, a number of notes can be drawn down in a cost-effective manner. MTNs are most similar to revolving credit lines, as they enable issuers to take advantage of changes in market conditions, and are a convenient cashflow management tool allowing quick access to funds. For MTNs on ISM, LSEG approval is required for the base prospectus only. Subsequent draw-down issues are allowed at any time during the one-year validity period of the prospectus, subject to publication of a relevant pricing supplement by 2pm the day before the issue.
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Key numbers
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22Komodo bonds
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42bnIDR raised
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7issuers
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Note
[1] Data as of September 2019 | Back to Note 1
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