corporate bond - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesian rating company, PT Pemeringkat Efek Indonesia (Pefindo) noted, the mandate for the issuance of corporate bonds until mid September worth of Rp46.02 trillion (US$3.26 billion). There are 26 private companies will issue bonds with total amount of Rp26.12 trillion and state owned enterprise (SOEs) worth of Rp19.9 trillion.

Previously, SVP at Pefindo, Hendro Utomo expect, the bond issuances until the end of this year could reach Rp130 trillion. In the first half (1H) of 2019, the value worth of Rp80 trillion.

In terms of the industrial sector, the issuer of the corporate bonds mostly came from the banking sector of Rp15.9 trillion then followed by the financing sector as much as Rp14.37 trillion, and pulp and paper around Rp8.2 trillion.

According to Fikri Permana, an economist from Pefindo, the challenge for the company in Indonesia in issuing bonds in the 1H was political risks. He noted bond issuances until July 2019 dropped from Rp92.0 trillion to Rp79.9 trillion.

However, his optimistic that the downward trend in the central bank benchmark rate will able to drive the number of bond issuances going higher in the 2H-2019. He stated, “Its hoped that until the end of the year the issuance of debt securities can reach Rp120 trillion to Rp130 trillion,” he said.

On the other hand, Indonesian government and state-owned enterprises (SOEs) has potential to issue bonds around Rp100 trillion in the second quarter (2Q) of 2019. Most of the amount will in government bond while six SOEs has reported to Indonesia Stock Exchange (IDX) to release bond around Rp13 trillion.

The six issuer’ bond issuance as follows PT PP Tbk (IDX: PTPP) Rp1.5 trillion, PT Semen Indonesia Tbk (IDX: SMGR) Rp4.9 trillion, PT Waskita Karya Tbk (IDX: WSKT) Rp1.84 trillion, PT Adhi Karya Tbk (IDX: ADHI) Rp2 trillion, PT Waskita Beton Precast Tbk (IDX: WSPB) Rp500 billion, and PT Kimia FarmaTbk (IDX: KAEF) Rp1.5 trillion.

The government estimated will issue a total gross State bond of 50-60 percent throughout the 1H of 2019, which includes retail government bond, foreign exchange government bond and regular government bond instruments. The total issuance value is around Rp128 trillion.

Finance ministry recorded the realization of the net government bonds issuance in the 1Q of 2019 reached Rp185 trillion and SUKUK issuance worth of Rp81.44 trillion. Totally, the bonds issuance value reached Rp266.44 trillion.

The directorate of general of financing and risk management at the ministry of finance stated that the total gross bonds reached Rp330.1 trillion in 1Q 2019. This value 39.98 percent of the bond issuances target throughout 2019 with the total amount Rp825.7 trillion.

While, observerToto Pranoto noted, there are two main reasons the SOE choose not to issue bonds this year. First is because the needs of the capital expenditure have been partially allocated in previous years, mainly the SOE in the construction and infrastructure sector or the utility sector such as PT Perusahaan Listrik Negara and PT Telkom Indonesia Tbk (IDX: TLKM).

In addition, he rated that the SOEs want to put the brakes on debt. He stated that by the end of December 2018, the total debt of SOEs almost reached Rp5,200 trillion.

SOEs in the financial sector recorded debt of nearly Rp3,200 trillion. The remaining debt is owned by non-financial SOEs, such as infrastructure, telecommunications, and others.

Meanwhile, PT Bank Tabungan Negara Tbk (IDX: BBTN) choose to issue sub debt and mortgage securitization rather than corporate bonds. Director of Finance, Treasury & Strategy of BTN Nixon L.P. Napitupulu said that the regular bond issuance quota has been completed so the company uses other income options.

PT Wijaya Karya Tbk (IDX: WIKA) said that it has no plan to issue bonds for the remainder of the year. Wijaya Karya Corporate Secretary Mahendra Vijaya said this was because the company’s funding was considered sufficient until the end of the year.

However, the subsidiary of SOEs still eye corporate bond as an external fund. Indonesia’ construction services firm PT Waskita Beton Precast Tbk (IDX: WSBP) plans to issue bonds of Rp1.5 trillion (US$105.63 million) in the fourth quarter of 2019. The bonds are part of a total bond of Rp2 trillion.

Company’ Corporate Secretary Fathia Syafurah said the subsidiary of state-owned contractor developer PT Waskita Karya Tbl (IDX: WSKT) had issued Rp500 billion of the total Rp2 trillion issuance. Syafurah explained the funds from the bond issuance will be used for working capital of Rp500 billion. While the rest will be used for refinancing.

The investment of Rp500 billion will be used to prepare a factory in Penajam Paser Utara, East Kalimantan. This plant was built to absorb market in the central and eastern regions of Indonesia, even regional markets in Southeast Asia. The Plant in Penajam will have a production capacity of 250 thousand tons/year and produce Box Girder, PCT Girder, Square Pile, and CCSP.

The company will also use the plant for supporting facilities in the form of production area, workshop area, and waste treatment area. Waskita Beton plans to expand by having its own jetty to facilitate access to shipping precast products directly from the plant to other islands because it has a strategic location with Balikpapan Bay.

US$1: Rp14,100

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