Jakarta. Sovereign wealth fund Danantara is exploring the possibility of issuing global bonds to diversify its sources of funding, according to a senior official.

Danantara’s treasury managing director Ali Setiawan said on Friday that the agency planned on issuing foreign-denominated global bonds in the future. The fund, however, wants rating agencies to make their assessments first before launching the sale. Ali signaled the likelihood of working with the Big Three agencies like S&P Global Ratings, Fitch Group, and Moody’s for better credibility.

“On global bond issuance, our target for 2026 is to get the credit ratings because we wish to achieve the best results. Why issue if the ratings are bad?” Ali told a press briefing in Jakarta.

The seasoned banker admitted that Danantara would likely issue dollar-denominated bonds, citing that it is the “most commonly used currency”. The nine-month-old sovereign fund will also consider Chinese yuan-denominated debt.

Ali claimed that Danantara had not decided on the size of the issuance.

Earlier this year, Danantara raised Rp 50 trillion ($3 billion) in the oversubscribed patriot bonds. The fund offered these bonds at below-market yields to Indonesia’s wealthiest businessmen in a private placement scheme. In other words, the transactions took place directly, rather than in a public offering. Parts of the proceeds are earmarked for Indonesia's ambition to set up waste-to-energy facilities. Danantara has put 24 companies, many of which are of Chinese origin, in a short list of technological partner candidates. 

Danantara is a largely state-owned enterprise or SOE-backed sovereign fund. 

It now controls all Indonesian SOEs, including the sub-subsidiaries. The agency's funds mainly come from the state firms' dividends, which can reach $7 billion each year. Danantara is in the process of slashing the number of SOEs from around 1,000 to slightly above 200 for better efficiency.

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