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Acrostics Asia’s analysis of Danantara’s “patriot bonds” was featured by LinkedIn News among the Top Perspectives.
Acrostics Asia’s take on Indonesian sovereign fund Danantara’s planned issuance of “patriot bonds” was picked by LinkedIn News as one of the Top Perspectives.
💼 Brief Take: Danantara’s Patriotic Pitch
27 August 2025
Indonesian sovereign fund Danantara has moved fast to build its capital structure.
President Prabowo Subianto’s government is seeking to rekindle the patriotic spirit by asking local tycoons to buy Danantara’s low-yield bonds.
Indonesia’s new sovereign wealth fund Danantara has sounded out investors on a plan to raise IDR 50 trillion (USD 3.1 billion) by selling so-called patriot bonds at below-market yields, Bloomberg reported on 26 August 2025.
Eveline’s Take:
🔸 Half a year since it was officially established, Danantara has moved fast to build its capital structure. “National-scale projects demand diversified financing. Funds come not only from the dividends of state-owned enterprises, but also bank loans, co-investments with other investors, and many other possibilities,” the fund wrote in its “Danantara Diaries”.
🔸 I wrote in November 2024 that Danantara was designed to pool Indonesian state-owned enterprises (SOEs) and leverage up to fund President Prabowo Subianto’s projects. Last month, Danantara appointed DBS, HSBC, Natixis, Standard Chartered and United Overseas Bank to arrange a USD 10 billion unsecured loan, Reuters reported.
🔸 The drawdown of the loan is likely tied to specific projects and the fulfilment of the agreed conditions. While Danantara is set to tap SOE dividends to service the loan, I wrote in July that the fund would have to expand its base of lenders and construct a bridge to bonds for potential refinancing. However, I flagged that some offshore bondholders may ask tougher questions to Indonesian issuers including Danantara.
🔸 Enter the Indonesian tycoons. Danantara wrote in its diaries that even though the coupons of the patriot bonds are below market rates, the structure reflects the bond’s purpose. “It’s like impact-first funds: those willing to sacrifice returns if it pushes their cause forward. But impact investors understand that once the payoff arrives, it will dwarf the sacrifice.”
🔸 The concept of “gotong royong” – described by Danantara as “the tradition of communities working together toward a shared goal” – is not new. Former President Suharto once invited around 30 business leaders, including Salim Group’s late founder Liem Sioe Liong, to his Tapos ranch near Bogor in March 1990, according to a book authored by Richard Borsuk and Nancy Chng.
🔸 At the ranch (which included a cattle breeding station and a go-kart track), Suharto addressed the thorny subject of the widening income disparity in Indonesia and urged the tycoons to take concrete action to help narrow this gap, Borsuk and Chng wrote.
🔸 Three decades later, Indonesia’s current president who was Suharto’s son in law, Prabowo, is seeking to rekindle that patriotic spirit. The Indonesian government met a group of tycoons on 23 August to brief them about the bonds and some of them agreed to invest IDR 2 – 3 trillion (USD 122 – 183.5 million) each, The Straits Times reported.