FINANCIAL INSTITUTIONS ENERGY INFRASTRUCTURE, MINING AND COMMODITIES TRANSPORT TECHNOLOGY AND INNOVATION PHARMACEUTICALS AND LIFE SCIENCES

Islamic Finance Roadshow Presentation

Government of Indonesia sukuk: Case Study
Ferzana Haq q Senior Associate Norton Rose (Asia) LLP 13 March 2012

Introduction
Sovereign issuances usually set the stage Government of Indonesia issued its second global sukuk in November 2011 Norton Rose advised the Government on Sharia structuring, English law and US Securities Law

SIN-#3408686v1

Significance of the transaction

Size: US$1 billion Pricing: 4 per cent. periodic distribution amount, 7 year tenor issued to a wide investor base Investment grade credit rating - sukuk was instrumental co confidence de ce in Indonesias do es a s eco economy o y the Governments commitment to promoting Islamic finance

SIN-#3408686v1

Sukuk structure

Sales Sa es of o Assets ssets Purchase Price

Certificates Ce t cates Cash

Republic of Indonesia

L Lease of f Assets A Rental Payments Sales of Assets upon dissolution

Perusahaan Penerbit SBSN Indonesia II

Periodic P i di Di Distribution ib i Amounts

Certificateholders

Redemption of Certificates

Exercise Price

Redemption amount

SIN-#3408686v1

Sukuk structure
ijara (sale and leaseback) over Government owned buildings Beneficial interests in properties sold by Government to SPV (PPSI - II) PPSI - II leased assets to Government as lessee in return for periodic rental payments PPSI - II appointed i t d Government G t as servicing i i agent t to t maintain i t i the assets Servicing Agent responsible for damage/losses Purchase Undertaking to purchase the assets upon dissolution for an exercise price

SIN-#3408686v1

Sukuk structure
familiar to investors, widely accepted suitable for long tenors Purchase Undertaking - asset based structure Sukuk rating = Sovereign rating fixed ed p price ce redemption ede pt o a amount ou t

SIN-#3408686v1

Special features
Sharia approval: DSN and Sharia Supervisory Boards of Citi, HSBC and Standard Chartered Issuer/SPV - incorporated onshore by way of government decree Sale of beneficial interests - permitted by government decree

SIN-#3408686v1

The future
Indonesias commitment to Islamic finance + encouragement to corporates Variations in structure Infrastructure/project based sukuk

SIN-#3408686v1

Disclaimer The purpose of this presentation is to provide information as to developments in the law. It does not contain a full analysis of the law nor d does it constitute tit t an opinion i i of f Norton N t Rose R (A (Asia) i ) LLP on the th points i t of f law discussed. No individual who is a member, p partner, shareholder, director, employee p y or consultant of, in or to any constituent part of Norton Rose Group (whether or not such individual is described as a partner) accepts or assumes responsibility, or has any liability, to any person in respect of this presentation. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of, as the case may be, Norton Rose LLP or Norton Rose Australia or Norton Rose Canada LLP or Norton Rose South Africa (incorporated as Deneys Reitz Inc) or of one of their respective affiliates affiliates.

SIN-#3408686v1