JAKARTA (TheInsiderStories) - Indonesia state financing firm PT Sarana Multi Infrastructure (SMI) to issue bonds with a value of Rp5 trillion (US$384.62 million) on November. The bond has attained of PT Securities Rating Indonesia (PEFINDO) rated idAAA.
Based on the prospectus published on Oct. 11, the Bond I SMI Phase I which is part of the Sustainable Bonds I saranan Multi Infrastruktur with fund target of Rp30 trillion in several years.The bond is comprised of four series. Series A mature on Nov. 15, 2019, Series B due on Nov. 15, 2021, Series C due on Nov. 15, 2026 and the D series will mature on Nov. 15, 2031.
More details, the three-year bond offers a coupon of 7.25 to 8 percent, five-year bond thrusting coupon of 7.5 to 8.25 percent, and the 10-year bond offers a coupon of 8.15 to 8.9 percent. Meanwhile, the proposed 15-year bond coupon of 8.4 to 9.15 percent.
The underwriters for bond issuance namely PT BCA Securities, PT CIMB Securities Indonesia, PT Danareksa Sekuritas, PT Indo Premier Securities, PT Mandiri Sekuritas, PT Maybank Kim Eng Securities and PT Trimegah Sekuritas Indonesia.
According to the plan, the funds obtained from the public offering will be entirely used for financing infrastructure projects.
In the five months to May, SMI has provided loans valued at Rp30.1 trillion to finance various infrastructure projects, including toll roads and power plants. The total value of the projects reached Rp118.7 trillion. The remaining funds came from other financial institutions.
The amount already far higher than the total financing extended by the company in 2015, amounted to R13 trillion. Edwin Syahruzad, director for Financing and Investment of SMI, expects the total financing provided by SMI this year is likely to be higher than the company’s target of Rp33 trillion.
“Given the amount of financing provided in the first five months, this year’s financing target is likely to be higher than the target,” he said.
Among toll road projects that financed by SMI is the Pandaan-Malang toll road project, in collaboration with state owned toll road operator PT Jasa Marga Tbk (JSMR) and PT PP, as the contractor of the project. SMI has an equity of 5 percent, PP 35 percent and Jasa Marga 60 percent.
In the project, SMI also provided the so-called cash deficiency facility to the toll road operator (Jasa Marga) to help cover the debt payment in the early stage after the toll road operates. Edwin said the cash deficiency facility is a helpful financing scheme because usually in the early stage a toll road operates, the traffic is still low, therefore it is not enough to repay the debt installments.
SMI still has ample cash to finance various infrastructure projects in the country. So far, it has secured various funding sources, including syndicated loan worth US$175 million received last year, medium term notes (MTN) worth US$100 million issued in March this year (part of the target US$300 million), as well as loan from PT Bank of Tokyo Mitsubish UFJ (PTMU) of Japan worth US$100 million.
Late last year, SMI also obtained low-rate loan facility from Agence Franchaise de Development (AFD) worth US$100 million to finance renewable energy projects. So far, SMI has drawn down US$10 million. The draw down of this financing depends on the availability of the project.
Darwin Trisna Djajawinata, director for Project Development and Consultation Services of SMI, said initially the company would provide financing to biogas and biomass energy projects, which utilize palm oil wastes. The other projects to be financed by SMI is geothermal and hydro power projects, which are ready for construction.
Indonesia has huge sources of renewable energy such as geothermal, hydro power, solar power, wind mill, biogas, biomass, and others. The government targets to increase share of renewable energy contribution in the energy mixed to 23 percent by 2025 from around 5 percent at present.
The Joko Widodo government is currently focusing in developing various infrastructure projects to help enable the country to record sustainable growth in the long run, including toll roads, ports, airports, power plants and others. (*)