Indonesia to raise up to $2 billion from US dollar Islamic bonds, sources say

Indonesia is looking to raise up to $2 billion from U.S. dollar-denominated Islamic bonds, two sources with knowledge of the matter said on Wednesday.

Southeast Asia's largest economy on Wednesday launched a five-year U.S. dollar-denominated sukuk with an initial price guidance of 4.85%, along with a 10-year green sukuk at 5.5%, according to a term sheet reviewed by Reuters.

The document did not specify the size of the issuance, and the Indonesian government has not yet provided an official comment.

U.S. President Donald Trump announced a trade deal with Indonesia on Tuesday, with a 19% tariff on goods from Indonesia, down from the 32% rate he had proposed earlier this year.

Indonesia President Prabowo Subianto's spokesperson told reporters on Wednesday that the trade deal was reached after an "extraordinary struggle" in negotiations which resulted in the reduction of the proposed U.S. tariff rates on Indonesia.

The deal is among only a handful reached so far by the Trump administration ahead of an August 1 deadline for negotiations.

Indonesian equities climbed to their highest point in a month following the news, defying a broadly subdued Asian equity markets as investors tempered their expectations of U.S. Federal Reserve rate cuts.

Indonesia's central bank cut rates later on Wednesday, the fourth time since September, and said the revised tariff deal with the U.S. was positive for economy amid weakening global trade and slowing domestic demand.

The rupiah was steady after the policy decision.

The sukuk bonds are being issued by Perusahaan Penerbit SBSN Indonesia III, with the Indonesian government acting as the obligor, according to the sheet, which added that they will be listed on both the Singapore Exchange and Nasdaq Dubai.

The bonds will hold credit ratings in line with the sovereign ratings of Indonesia at Baa2 by Moody's, BBB by S&P and BBB by Fitch.

Indonesia will use the proceeds to meet part of its general financing requirements, with proceeds from the 10-year green sukuk going to finance or re-finance eligible green expenditures, according to the document.

Deutsche Bank DBK and HSBC HSBA are the joint green structuring coordinators.

Bank of America BAC, Deutsche Bank, Dubai Islamic Bank DIB, HSBC and Mandiri Securities are the bookrunners, while BRI Danareksa Sekuritas and Trimegah Sekuritas Indonesia TRIM are the co-managers, the sheet showed.