Indonesian sovereign wealth fund Danantara is likely to draw down $3 billion initially from a $10-billion credit line and use it for investments including a chemical plant and co-financings with Qatar’s and China’s wealth funds, sources said.
The credit line, which a source said has been secured from five foreign banks, would become the biggest such loan disbursed in Southeast Asia by private sector banks when fully drawn down. The facility also represents the first private sector funding for Danantara, which was set up in February and given control of more than $900 billion worth of assets.
Daya Anagata Nusantara – better known as Danantara – is part of an ambitious plan of President Prabowo Subianto who swept to power last year by promising to grow the $1.5 trillion economy at a rate of 8% compared to the current 5%.
Danantara did not respond to a request for comment. The two sources, who had direct knowledge of the matter, asked to remain anonymous because they were not authorised to speak to the media.
One of the projects the initial drawn down sum will be used for is a roughly $800 million chlor-alkali and ethylene dichloride plant of petrochemical firm Chandra Asri Pacific, one of the sources said.
In June, Danantara and the Indonesia Investment Authority, the country’s first sovereign fund, said they might become new investors in the project, which will produce material used in the water treatment, soap, alumina, and nickel industries.
Earlier this year, Danantara also signed agreements separately with the Qatar Investment Authority and China Investment Corporation on potential co-investments. It was not immediately clear which projects in these partnerships would be financed by the initial drawn down amount.
DBS, HSBC, Natixis SA, Standard Chartered and United Overseas Bank were appointed this week as the lead arrangers for the $10 billion facility, one of the sources said, adding they were among 11 foreign banks that submitted proposals.
DBS, Natixis and HSBC declined to comment, while the other two banks did not immediately respond to requests for comment.
The $10 billion credit facility will be available for the next three years, the source said, adding that Danantara had no plans to issue bonds at the moment.
The facility carries interest rates on par with Indonesian sovereign bond yields, and each bank committed to lend $1 billion without security and government guarantees, the source said, adding: “Danantara is a sovereign.” As a comparison, Indonesia sold in January $900 million worth of five-year U.S. dollar-denominated bonds with a 5.30% yield.
Loan proposals from some other foreign banks were considered but they could not agree on terms as those lenders had asked for a government guarantee, the source said. As lead arrangers, they will typically bring in other banks to fund the remainder of the total facility.
Reuters
