📒 Quick Take: Danantara’s Bond Roadshow
The challenge for the sovereign fund is building a refinancing machinery that can keep up with the scale and speed of the Indonesian president’s ambitions.
While the stated bond proceeds are for general corporate purposes, some potential investors tried to get clarity on the intended allocation.
Danantara’s credit profile is linked with Indonesia’s sovereign risk.
In Acrostics Asia’s Indonesia Radar on 2 June 2026, a buyside friend said international investors’ response to Danantara’s potential bond issuance may depend on the timing, as the sovereign fund has been surrounded by negative news such as Indonesia’s centralization of commodity exports.
The next day, Danantara’s investment arm, Danantara Investment Management (DIM), launched its bond roadshow amid a market sell-off and headlines about global funds reducing their exposure to Indonesia. The roadshow kicked off with meetings in Hong Kong and Singapore, then shifting to Boston and New York this week.
In its offering memorandum, Danantara made clear that the Indonesian government is not guaranteeing any of its obligations in respect of the notes.
Some of the questions asked by investors during the meetings revolved around governance, investment scope, as well as DIM’s relationship with Danantara’s asset management arm (DAM) and the broader fund, according to market talk.
Even though the stated bond proceeds are for general corporate purposes, these investors were trying to get more clarity about the intended allocation, such as whether there’s any possibility that the money would flow towards the restructurings of troubled state-owned enterprises (SOEs) that fall under DAM’s purview.
Danantara told some investors that it plans to use part of the proposed bond proceeds to help refinance a USD 1 billion loan it got earlier this year, Bloomberg reported. Some potential bondholders may ask why a portion of their investment would be allocated to pay the banks at this time, though others might see it as a form of capital management.
A second buyside investor said that Danantara is seen as a sovereign-linked credit and the fund should have the backing of the Indonesian government. A third source familiar with the matter also noted that issuers have the flexibility of deploying cash for corporate purposes, such as tapping bond proceeds to refinance a loan used for investments.
Sovereign Risk
From a rating perspective, the consensus among the international rating agencies is that the Indonesian government is expected to provide support for Danantara. However, the move by Moody’s to assign a negative outlook to the proposed bond issuer, DIM, has caught the attention of some analysts.
“At first glance, (Moody’s) Baa2 rating is supportive. However, the more important message lies in the strong linkage between Danantara’s credit profile and Indonesia’s sovereign risk,” Jakarta Globe reported, citing Kiwoom Sekuritas Indonesia Head of Research Liza Camelia Suryanata’s research note.
I wrote on 14 January 2026 that concerns about Indonesia’s widening deficit risked pushing up the offshore borrowing costs for Danantara, but the fund still had a few domestic levers to push, such as the dividends upstreamed by SOEs and the sale of low-yield notes to local investors.
Danantara is planning to sell local-currency bonds that will pay interest below market rates, Bloomberg reported on 5 June 2026. The rupiah debt was dubbed the “Merah Putih Bond”, referring to the red and white colours of the country’s flag.
Danantara should be able to raise some money domestically or internationally given its perceived sovereign backing. The challenge is building a refinancing machinery that can keep up with the scale and speed of the Indonesian president’s ambitions.
Acrostics Asia Coverage
Acrostics Asia is an independent credit intelligence provider that connects the dots across Asian sovereigns, private credit and restructurings.