KAI inaugurated the 2nd generation Inspection Train at Semarang Tawang Station (6/1).

JAKARTA (TheInsiderStories) – State-owned railway operator PT Kereta Api Indonesia (KAI) plans to generate Rp2 trillion (US$140 million) from its second corporate bond issuance, as it seeks a sizeable amount of funds for the replacement of obsolete train cars this year.

The company needs to replace about 1,000 train cars to assure better service, safety and convenience for passengers, as well as efficiency in company operational costs, according to KAI President Director Edi Sukmoro.

Last year the company issued bonds divided into two series, Series A bonds with maturities of five years and coupon rates of 7.25-8 per cent, and Series B bonds with maturities of seven years and bond coupon rates of 7.5-8.35 per cent.

The government is pushing private companies and state-owned enterprises (SOEs) to issue more bonds this year, in order to finance infrastructure projects and reduce reliance on state budgets.

SOE Minister Rini Soemarno predicts that more bonds will be issued this year. The government also expects continued efforts to finance projects through securities and loan syndicate schemes.

Currently, KAI  is the main main investor in Greater Jakarta’s LRT project, where the total investment reaches US$25 billion. In collaboration with a bank consortium, KAI provides signed loan syndication worth Rp19.25 trillion (US$1.4 billion) from 12 banks.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com