THE Republic of Indonesia (RoI) was quick to take advantage of the rating upgrade from Moody’s Investors Service as it returned to the international debt capital markets for the second time this year, pricing on April 17 a dual-currency offering in US dollar and euro.

The SEC-registered transaction consisted of US$1 billion for 10 years, which was priced at a coupon of 4.10% and a yield of 4.13%. This represented a compression of 27bp from the initial price guidance of the 4.40% area.

The euro tranche was for one billion euros (US$1.23 billion) for seven years and was priced at a coupon of 1.75%, yielding 115bp over the seven-year mid-swap rate, or 1.78%. The represented a 22.5bp tightening from the initial price talk of the 137.5bp area over mid-swap.

The euro coupon is the lowest ever achieved by the sovereign in this market and the bonds mark the RoI’s fifth issuance in euro and its first US SEC-registered euro issuance.

The US dollar tranche, on the other hand, represented the RoI’s inaugural US dollar-denominated bond offering issued off the newly-established US SEC-registered shelf and demonstrates the country’s strong commitment to further deepen the secondary liquidity pool of its tradable securities available to US investors.

The transaction was an opportunistic trade by the sovereign, taking advantage of the positive tailwind provided by Moody’s decision to upgrade its long-term issuer and senior unsecured ratings to Baa2 from Baa3 on April 13, as well as the improved macro backdrop after the Easter holidays.

Credit Agricole CIB, Deutsche Bank, Goldman Sachs, HSBC and Mandiri Securities were the joint bookrunners for the transaction, while Bahana Securities, Danareksa Sekuritas and Trimegah Sekuritas Indonesia acted as co-managers.

In announcing the rating upgrade, Moody’s notes the credible and effective policy framework achieved by the RoI that is conducive to macroeconomic stability. Together with the build-up of financial buffers, prudential fiscal and monetary policy has improved the country’s resilience and capacity to respond to shocks.

Responding to the rating upgrade, Bank Indonesia governor Agus D W Martowardojo says the central bank will remain vigilant on increasing global risk and will optimize the policy mix, including macro-prudential policy and financial market deepening initiatives to maintain economic stability as a key foundation to attain a stronger, sustainable and inclusive economic growth.

This is the second fundraising by the RoI this year, having priced a dual-tranche sukuk offering totaling US$3 billion in February that included the first ever green sukuk from a sovereign amounting to US$1.25 billion.