ADB supports Indonesia’s first social bond and sukuk issuance

State-owned secondary finance company PT. Sarana Multigriya Finansial (SMF) raised 500 billion rupiah ($32.4 million) through a social bond and 200 billion rupiah ($13 million) through a social sukuk on 22 December 2023. Both instruments were listed on the Indonesia Stock Exchange on 27 December 2023. This is part of an issuance program that allows PT SMF to raise up to 8 trillion rupiah in future bond issuances and 1.5 trillion rupiah in future sukuk issuances to finance new and existing projects with positive social outcomes such as affordable housing.

Source: Internet

These instruments were issued under the International Capital Market Association’s Social Bond Principles and the Association of Southeast Asian Nations (ASEAN) Capital Markets Forum’s Social Bond Standards. This milestone also represents the first issuance of labeled social bonds and sukuk in line with the requirements for sustainability-related bonds and sukuk set by the Financial Services Authority.

“The funds raised through this issuance will be used to finance housing and settlement activities in Indonesia to increase home ownership and the availability of affordable housing projects for low-income earners,” said PT SMF President Director Ananta Wiyogo. “As a state-owned enterprise, we hope our pilot transaction under the new regulation will greatly contribute to developing a sustainable bond market in Indonesia.”

ADB provided technical assistance to support bond framework development, capacity building, and external review through the ASEAN Catalytic Green Finance Facility (ACGF) and the Asian Bond Markets Initiative (ABMI).

“This innovative transaction demonstrates ADB’s commitment to promoting inclusive social development in Indonesia while supporting the development of a sustainable capital market,” said ADB Country Director for Indonesia Jiro Tominaga. “This pilot transaction will contribute to the future growth of Indonesia’s sustainable bond market.”

The ACGF is an ASEAN Infrastructure Fund initiative to accelerate green infrastructure investments in Southeast Asia. ABMI is a joint initiative from ASEAN, Japan, the People’s Republic of China, and the Republic of Korea to develop local currency bond markets./.