JAKARTA (TheInsiderStories) – State run lender, PT Bank Tabungan Negara Tbk (IDX: BBTN) will issue bonds with a maximum principal value of Rp1.5 trillion (US$104.90 million), which will be used to support the housing loans. The bonds are part of its ongoing bonds plan with an overall target of Rp10 trillion.
Based on the prospectus released today (07/10), the company issued three series of bonds, namely Series A with a tenure of 370 days, Series B three years of tenure, and Series C with five years term. The company received an idAA + rating from PT Pemeringkat Efek Indonesia.
The underwriters for the bond issuance are PT CIMB Niaga Sekuritas, PT Danareksa Sekuritas, PT Indo Premier Sekuritas, and PT Mandiri Sekuritas. So far the company had collected Rp9.14 trillion of the total target of the bond offer. In addition to Rupiah bonds, beginning in 2020, Bank Tabungan Negara has issued $300 million in global junior bonds with a 4.2 percent coupon and a five-year term.
Recently, the government placed Rp5 trillion in funds to the state lender. According to the CEO, Pahala Mansury, his office will distribute the funds to the housing and construction sectors.During the first quarter (Q1), credit growth of the lender only grew 4.59 percent to Rp253.25 trillion, from Rp242.14 trillion last year.
As for interest income of up to Rp6.17 trillion and lending of Rp253.25 trillion, up 4.59 percent annually from Rp 242.13 trillion in Q1 2019. The net profit of Bank Tabungan Negara fell by 36.79 percent to Rp457 billion from the same period the previous year of Rp723 billion.
Earlier this year, global rating, Moody’s Investor Service confirmed the rating of local long-term deposits and Baa2 foreign currencies from the state-owned bank. At the same time, the agency has assigned a subordinated Ba3 rating for Tier 2 capital denominated in US Dollars.
Moody’s hopes that the quality of the assets of the Bank Tabungan Negara will remain under pressure for the next 12-18 months, as a result of aggressive loan expansion activities since 2015 per the government housing program. In addition, the slowing domestic economy will burden the debt service capabilities of bank borrowers, especially given its concentration in the low and middle income segments and exposure to small and medium-sized developers.
However, the rating agency hopes that bank profitability will increase slightly over the next 12-18 months. Bank financing costs will also decrease after cutting reserve requirements and central bank policy levels, and following easing liquidity conditions.
Moody’s also anticipates a stable recovery in bank capitalization and a moderate loan growth rate of around 6 percent for 2020. It is said, the long-term deposit rating of Bank Tabungan Negara is at the same level as the Indonesian government. Given the stable outlook on the country’s rating, upgrading the bank deposit rating is not possible.
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