PT Pegadaian is targeting to raises fund up to Rp2 trillion (US$142.86 million) from Rupiah bond and SUKUK issuances, said the company yesterday - Photo by the Company

JAKARTA (TheInsiderStories) – Two state-owned companies, flag-carrier PT Garuda Indonesia Tbk (IDX:GIAA) and pawnshop firm PT Pegadaian have unveiled their plan late last week to issue bonds to fund their business expansion as well as refinancing.

Garuda said it will issue global bonds worth US$750 million or around Rp10.2 trillion. Finance and Risk Management Director Helmi Imam Satriyono said the company has appointed four underwriters, namely Standard Chartered Bank, Deutsche Bank, ANZ and Bank of Tokyo Mitsubishi, for the bonds issue.

He said around $250 million of the bonds proceeds will be used to fund its operation and the remaining $500 million for refinancing.

In 2017, Garuda booked net losses of $213.4 million or Rp2.88 trillion, compared to a net profit of $9.4 million the previous year, driven by higher expenses, in particular, aviation fuel, along with extraordinary expenses, which amounted to $145.8 million, including settling previous debts under the tax amnesty program.

Meanwhile, revenues reached $4.2 billion, up 8.1 per cent from the $3.9 billion reported the previous year. In 2016, Garuda booked a thin net profit of just $9.4 million.

The airliner has vowed to return to profitability this year, on anticipated aviation industry improvement, after recording losses last year. The company expects to book a net profit of $8.7 million, or around Rp117.45 billion, this year, on revenues of $4.9 billion or Rp66.15 trillion, higher than last year.

Meanwhile, Pegadaian said it plans to issue bonds worth Rp3.5 trillion later this month to fund its financing activities.

The bonds will be divided into three series – Series A worth Rp450 billion with coupon rate of 5.80 per cent and tenor of 370 days; Series B worth Rp1.05 trillion with coupon rate of 6.90 per cent and tenor of three years; and series C worth Rp2 trillion, with coupon rate of 7.10 per cent and tenor of 5 years.

In addition, the company also mulls a plan to issue sharia-based medium terms note (MTN) worth Rp500 billion. Director for Finance and Technology of Pegadaian Teguh Wahyono Guna was quoted by Bisnis Indonesia as saying that the sharia-MTN is scheduled to be issued in the first semester. The MTN’s value could still be raised up to Rp1-2 trillion.

Pegadaian has appointed Bahana Sekuritas, BNI Sekuritas, Danareksa Sekuritas and Mandiri Sekuritas as underwriters of the bonds issue. The offering date is set on March 13 and followed by listing on the Indonesian Stock Exchange on March 19, 2018.

US$1 = Rp13,500