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Danantara's bond issuance plan prompts calls for transparency
Transparency from the outset to allay foreign investor's concerns is key to the success Danantara's plan to issue bonds, analysts say.
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The Danantara Indonesia logo sign stands on Feb. 28, 2025, at the sovereign wealth fund’s headquarters in Menteng, Central Jakarta. (Reuters/Willy Kurniawan)
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anantara has announced that both its operating and investment holdings will eventually issue bonds in addition to those issued by some state-owned enterprises (SOEs) under its umbrella, albeit with careful consideration of cash flow capacity to ensure repayment.
Analysts expect the state assets fund to make use of bond instruments only for large-scale projects where individual SOE fundraising efforts fall short. However, they warn that such moves must involve transparency from the planning stage onward to avoid financial setbacks from unprofitable projects that could strain the fund’s sustainability.
The recently revised SOEs Law, which serves as the legal basis for Danantara’s establishment, allows the fund’s operating and investment holdings to raise funds through bonds and loans.
Arief Budiman, Danantara’s chief financial officer, confirmed that the agency planned to secure funding at the holding level through loans or bonds, in addition to the bonds issued by individual SOEs, but noted that the technical details had yet to be clarified.
“The short answer is, yes,” Arief responded on Wednesday to questions about the fund’s bond issuance plan. “Where and how, that is something we need to approach with different measures.”
He also stressed the importance of maintaining the financial health of the fund’s operating and investment holdings, emphasizing that they had to be self-sufficient and sustainable.
Danantara’s investment arm would only consider issuing bonds only for large-scale greenfield projects that lent themselves to project finance and nonrecourse structures, he continued, and that bonds would be issued only if the fund was confident in its ability to repay and had a solid pipeline of profitable commercial investments.
