Bank Danamon's Headquarters in Jakarta - Photo by Bank Danamon

JAKARTA (TheInsiderStories) – PT Bank Danamon Indonesia Tbk (IDX: BDMN) which owned by The Bank of Tokyo Mitsubishi UFJ (MUFG) released bonds of US$138.9 million (Rp2 trillion) with coupons of 7.55-8.55 percent, said an official statement on Thursday (05/23).

The bonds are issued in two series: series A valued at Rp1.14 trillion with an interest rate of 7.55 percent per year which will be paid every three months, has a tenor of 370 calendar days.

Then, series B has a nominal value of Rp852 billion with a coupon of 8.55 percent per year. This series will mature May 24, 2022, or a tenor of 36 months.

The Company has obtained effectively from the Financial Services Authority on May 21, 2019, and the bond offering period will be held on May 22, 2019. The bonds will be listed on the Stock Exchange on May 27.

Acting as underwriters of bonds issuance were PT CGS-CIMB Securities Indonesia, PT DBS Vickers Securities Indonesia, PT Indo Premier Securities, PT Mandiri Sekuritas and PT Maybank Kim Eng Sekuritas.

This issuance is part of the 2019 Sustainable Bonds I with a total issuance target of Rp 5 trillion. Previously, the management of Bank Danamon confirmed that the bond issuance was aimed at companies for lending and increasing bank liquidity.

On May 1, MUFG as the company’s shareholder also completed the merger of Bank Danamon and PT Bank Nusantara Parahyangan Tbk (BBNP). This merger has been effective as of 1 May 2019 where BBNP has joined Bank Danamon as the bank that received the merger.

The plan for this year, the BDMN itself is targeting a bond amount of Rp 5 trillion. “The bonds will be offered in three series, namely series A, series B, and series C with tenors of 1 year, 3 years and 5 years respectively,” said Abraham Sihaloho, Bank Danamon External Affairs Head.

Recently, Moody’s Investors Service has affirmed the Baa2/P-2 local and foreign currency deposit ratings for the bank. The outlook on the ratings is maintained at stable.

At the same time, Moody’s has affirmed the bank’s Baseline Credit
Assessment (BCA) of Baa3, adjusted BCA of Baa2, counterparty risk ratings at Baa1/P-2 and counterparty risk assessment (CR Assessment) at Baa1(cr)/P-2(cr).

The affirmation of BDMN’s BCA at baa3 reflects Moody’s expectation that the bank will continue to maintain strong capital, good profitability and asset quality will continue to stabilize over the next 12-18 months.

The successful reduction in the micro-financing portfolio has resulted in improved asset quality. Consequently, profitability has also improved over the past 12-18 months, driven by a gradual decline in credit costs.

The BCA also factors in BDMN‘ weaker funding structure than that of its domestic peers and Moody’s expectation of a reduction in the bank’s stock of liquid assets over the next 12-18 months, as a result of faster loan growth.

US$1 = Rp14,400

Written by Lexy Nantu, Email: lexy@theinsiderstories.com