The Minister of Finance and the Minister of Finance Sri Mulyani Indrawati inaugurated the new office of Indonesia Eximbank - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesian Export Financing Agency or Indonesia Eximbank will re-issue global bonds with worth of US$900million. Eight international banks are expected to win LPEI’ global bond rights.

The banks are Bank of Australia and New Zealand, CTBC, First Abu Dhabi Bank, Bank Mizuho, Mitsubishi UFJ Financial Group (MUFG), Standard Chartered Bank, Sumitomo Mitsui Banking Corp, and Bank United Overseas.

At the same time, the lender also to issue Rupiah bond and SUKUK as much as Rp3 trillion ($214.29 million) with four series and tenure. Series A have tenure 370 days with coupon rate 7.35 percent, Series B three years with coupon rate 8.40 percent, Series C five years with coupon rate 8.90 percent.

Then Series D with tenure seven years with coupon rate 9.25 percent, Series E 10 years with coupon rate 9.50 percent, and Series F 15 years with coupon rate 9.80 percent.  The state company set the offering time April 15 – 16, allotment April 18, and to be listing at the Indonesia Stock Exchange April 24.

The bond issuance helped by PT Bahana Securities, PT BCA Sekuritas, PT BNI Sekuritas, PT CSG-CIMB Sekuritas Indonesia, PT Danareksa Sekuritas, PT DBS Vickers Sekuritas Indonesia, PT Indo Premier Sekuritas, and PT Mandiri Sekuritas.

Recently, Moody’s Investors Service has affirmed  Indonesia Eximban‘ long-term local and foreign currency issuer ratings of Baa2. It also affirmed the bank’ long-term and short-term foreign  currency Euro medium-term note (MTN) program ratings of (P)Baa2 and (P) Prime-2 respectively, as well as its long-term foreign currency senior unsecured debt ratings of Baa2.

In the fourth quarter of 2018, Indonesia Eximbank‘ non-performing loan ratio increased significantly to 13.7 percent from 6.2 percent in the previous quarter, because of an internal portfolio review to identify problematic accounts. These loans constituted 8.9 percent of the bank’ portfolio at the end of 2018.

Moody’s rated, the lender profitability over the next 12 to 18 months will continue to come under pressure because of potential slippages from restructured loans, and the low loan-loss coverage ratio will result in continued high provisioning costs. Indonesia Eximbank‘ loan-loss coverage ratio was significantly below the industry average and stood at 31.7 percent at the end of 2018.

During 2018, the surge in NPLs resulted in the sharp decline of Indonesia Eximbank’ net profit to Rp172 billion from Rp1.02 trillion the year before.

Indonesia Eximbank held a relatively low level of liquid assets (10.3 percent of total assets) at the end of 2018. The bank is also more susceptible to external market conditions than domestic commercial banks, due to its reliance on wholesale funding. Refinancing risks are, however, mitigated because of the bank’s quasi-sovereign status, which provides it access to the global markets.

Indonesia Eximbank‘ capital remained strong at the end of 2018. The bank’ Tier 1 capital ratio stood at 16.8 percent as of the same date, supported by past capital infusions from the Indonesian government. Moody’s expects capital support from the government to be forthcoming, given the government’ track record.

Indonesia Eximbank headquartered in Jakarta, and reported total assets of Rp120 trillion at Dec. 31, 2018. As one of the government’ Special Mission Vehicle to support Indonesian exports.

Finance minister Sri Mulyani Indrawati expect Indonesia Eximbank can play a large role in the current account that has a deficit. During 2018, Indonesia’ Current Account experienced a deficit of $8.57 billion or the worst in history.

Imports cannot be prevented from increasing because of the need for raw materials and stabilizing goods price, so that exports must be able to be increased more expansively with various strategic initiatives.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com