Danantara, Indonesia’s newly established sovereign wealth fund, is expected to draw down an initial US$3 billion from a US$10 billion credit line secured through a consortium of international banks, according to sources with direct knowledge of the matter.
The financing arrangement, sourced from five foreign banks, marks the first instance of private sector funding for Danantara and is set to become the largest facility of its kind disbursed in Southeast Asia by private banks, should it be fully utilised. Danantara, formally known as Daya Anagata Nusantara, was launched in February and oversees assets exceeding US$900 billion.
This development aligns with President Prabowo Subianto’s ambitious economic strategy to accelerate Indonesia’s GDP growth to 8 percent—up from the current rate of 5 percent. The fund is envisioned as a key vehicle for driving large-scale investments and catalysing economic transformation across the archipelago.
Among the first investment initiatives supported by the facility is a US$800 million chlor-alkali and ethylene dichloride plant, developed by petrochemical group Chandra Asri Pacific. The facility is expected to contribute to key downstream sectors, including water treatment, soap, alumina, and nickel production. Danantara and the Indonesia Investment Authority previously signalled potential participation in the project in a joint statement issued in June.
Additionally, Danantara has signed separate co-investment agreements with the Qatar Investment Authority and China Investment Corporation earlier this year. However, the specific projects earmarked under these partnerships for funding through the initial drawdown have yet to be confirmed.
DBS, HSBC, Natixis SA, Standard Chartered, and United Overseas Bank were named lead arrangers for the US$10 billion facility. These institutions were selected from a competitive pool of 11 international banks that submitted proposals, one source noted. While DBS, Natixis, and HSBC declined to comment, the remaining banks had not responded to inquiries at the time of publication.
The credit facility will remain available to Danantara over a three-year term. The interest rate is understood to be on par with yields on Indonesian sovereign bonds. Each participating bank has committed US$1 billion on an unsecured basis, with no requirement for a government guarantee—an unusual feature for transactions of this scale. A source remarked, “Danantara is a sovereign.”
In January, Indonesia issued five-year US dollar-denominated sovereign bonds with a 5.30 percent yield, offering a reference point for the pricing of the current facility.
While proposals from other foreign lenders were considered, they were ultimately rejected due to their requirement for government backing. As is standard in such syndications, the lead arrangers are expected to engage additional banks to contribute towards the full value of the facility. At present, Danantara has no immediate plans to issue bonds.
Danantara did not respond to a request for comment.
-Reuters
