On 27 May 2015, PT Garuda Indonesia (Persero) Tbk priced a US$500 million 5 year Sukuk offering with a coupon of 5.950%. The inaugural international offering followed a comprehensive global roadshow conducted in Abu Dhabi, Dubai, Singapore, Hong Kong, Zurich and London.
Based on strong positive feedback from investors, Garuda launched the transaction at price guidance of 6.250%. The orderbooks quickly built to US$1.9bn allowing tightening of the guidance and final coupon at 5.950%.
By geography, 56% of the deal was allocated to the Middle East, followed by 32% to Asia and the remaining 12% to investors in Europe. By investor type, banks / agencies took the bulk of the offering at 52% while private banks / corporates and fund managers were allocated 29% and 19% respectively.
The offering was structured as a Wakala Sukuk based on Rights to Travel using an orphan-based SPV, Garuda Indonesia Global Sukuk Limited as the issuer. This is the first non-sovereign USD Sukuk out of Indonesia – paving the way for other Indonesian SOEs and corporates to tap this market.
Garuda’s Sukuk offering was done without any government or financial institution guarantee, making it the first Asia Pacific national flag carrier to successfully issue a USD benchmark bond on a standalone basis since Qantas Airways’ USD bond offering in April 2006.
This landmark offering has many firsts to its credit namely:
- First unrated USD Sukuk from an Asia Pacific issuer
- First USD Sukuk transaction from an Asia Pacific airline
- First USD Sukuk al-Wakala from an Asia Pacific corporate
- First unrated USD benchmark bond from an Asia Pacific national flag carrier
The proceeds will be used for Garuda’s Shari’a compliant general corporate purposes, including the repayment of certain existing Islamic financing arrangements.
Arif Wibowo, President & CEO said, “I am delighted with the outcome of this landmark transaction for Garuda as it validates investor confidence in Garuda’s role as the national flag carrier of Indonesia. This Sukuk represents a significant milestone in the continued development of the Islamic capital market for the country.”
Ari Askhara, CFO and Director of Risk Management said, “The Sukuk offering has allowed Garuda to lock-in new funding at an attractive cost. Through this exercise, we have successfully re-profiled and extended maturity of our debt schedule. Leveraging the strength of potential domestic market, strong support from the shareholders, credentials of both the Board of Commissioner and Director and new risk compliance from the new management.”
- This is successful story of GA rebound
- Trusts from international market after challenging situations such as financial loss and undersubscribed for the right issue in 2014.
- The deal has been supported by Banks as Join Lead Managers, with big support from Dubai Islamic Bank, ANZ, Standard Chartered Bank, Deutsche Bank and others.
Jakarta, 29 May 2015
PT GARUDA INDONESIA (PERSERO) Tbk.
VP CORPORATE COMMUNICATIONS