Bank KB Indonesia postpones dollar bond sale amid market volatility
The delay follows MSCI’s warning over Indonesia’s emerging-market status, as corporate borrowing conditions also tighten globally.
Bank KB Indonesia has put a planned dollar bond issue on hold, citing volatile markets, according to people with knowledge of the transaction cited by Bloomberg. They said the lender could return to the market later.
The transaction would have marked the first corporate bond sale from Indonesia following MSCI’s warning that Indonesian equities could lose emerging-market status. A spokesperson for the bank could not immediately comment.
The bank had started marketing a three-year note carrying an expected BBB rating from Fitch, its second-lowest investment-grade rating. Indicative pricing was around 275 basis points above Treasuries, against roughly 120 basis points for Asian corporate debt with similar ratings, according to Bloomberg-compiled data.
Globally, corporate bond yield premiums reached their highest level in 17 months amid worries over artificial intelligence funding and governments’ fiscal challenges. Indonesian corporate debt has nevertheless suffered a steeper sell-off than regional counterparts since MSCI’s Oct 15 announcement renewed attention on governance concerns.
Nicholas Yap, Nomura Holdings Inc’s head of Asia credit desk analysts, said the MSCI warning and sovereign outlook downgrades by Moody’s Ratings and Fitch Ratings had weakened sentiment towards Indonesia. He also pointed to bank-specific issues: its small size, weak standalone fundamentals and push to issue before month-end.
South Korea’s Kookmin Bank owns two-thirds of KB Bank. Yap said government-owned borrowers with sound fundamentals should retain access to dollar funding, though investors would probably demand unusually large premiums for new issues.
