Pupuk Kaltim set to build two urea plants in North Sumatra

Nani Afrida, The Jakarta Post, Jakarta | Wed, 05/19/2010 10:57 AM

State owned fertilizer company PT Pupuk Kalimantan Timur (Pupuk Kaltim) will build two fertilizer plants and develop oil palm plantations in North Sumatra in cooperation with two state owned plantations firms PT Perkebunan Nusantara (PTPN) IV and PTPN V, the fertilizer producer’s top executive has said.

Pupuk Kaltim’s president director Hidayat Nyakman said in Jakarta on Tuesday that the three companies would soon set up a joint venture to operate the two fertilizer plants and to develop oil palm plantations which would absorb an initial investment of about Rp 500 billion (US$55 million).

Pupuk Kaltim will have a 51 percent stake in the joint venture which will be named Nusantara. PTPN IV which is based in North Sumatra, will have a 35 percent stake and PT PTPN V in Riau province will control the remaining 14 percent.

“The construction of the two fertilizer plants will cost about $18 million,” he said adding that the fertilizer factories would have a combined production capacity of 200,000 tons a year.

The joint venture will also spend up to Rp 39 billion to develop the plantations, which will cover an area of between 12,000 and 13,000 hectares, Hidayat said.

He also said that part of the fertilizer production would be used for the joint venture’s plantations, and the rest for the two plantation companies’ own plantations.

Last year, Pupuk Kaltim also established a joint venture with a state plantation company. Joint venture PT Kalianusa is developing 13,000 hectares of oil palm plantations in East Kutai, East Kalimantan.

Besides establishing new joint ventures with several state plantations, Pupuk Kaltim is also building a Nitrogen, Phosphorous, and Potassium (NPK) fertilizer plant, and a new urea plant (Kaltim V) as well as a new coal-fired power station its industrial compound in Botang, East Kalimantan.

“Those projects require Rp 11 trillion in total investment,” Hidayat said. “The projects are financed with our own funds and bank loans. We can also sell bonds if needed,” he added.

Last year, Pupuk Kaltim issued bonds worth about Rp 1.3 trillion partly to finance projects.

The company, which produces three kinds of fertilizers; urea, NPK and ammonia, expects to book net profits of Rp 1 trillion this year, higher than the Rp 832.2 billion recorded in 2009.

Pupuk Kaltim supplies two-thirds of the country’s urea fertilizer production. This year, it expects to produce about 3 million tons of urea, a slight increase over the 2.94 million tons produced in 2009.

Pupuk Kaltim expects that the new Kaltim V urea fertilizer plant will boost the company’s urea fertilizer production nationally to 3.4 million tons a year. At present total domestic consumption of fertilizer reaches about 14 million tons per year. The government predicts that by 2025 Indonesia will need about 23.2 million tons of fertilizer per year to meet growing demand.

Jamsostek to expand into financial sector, healthcare service

Nani Alfrida, The Jakarta Post, Jakarta | Fri, 02/12/2010 11:22 AM

State workers’ insurance company PT Jamsostek plans to enter the financial sector, including banking, and healthcare services as part of the company’s expansion program, says a Jamsostek senior executive.

Jamsostek president director Hotbonar Sinaga said in Jakarta on Thursday the company would soon establish the investment firm, Jamsostek Investment Company (JIC), which would handle the company’s direct investments.

JIC will be established with an initial investment of Rp 1 trillion (US$107 million) and will manage all Jamsostek’s subsidiaries, he said.

Jamsostek, which at present places most funds collected from workers either in the form of savings or social and work insurance in bank deposits and portfolio investments such as bonds and equity, is also preparing to establish a reinsurance company to help mitigate the business risks of state companies, he said.

“The reinsurance firm will be established this year and will operate in cooperation with strategic partners,” he said during a hearing with the House of Representatives’ Commision IX overseeing population, health, employment and transmigration.

“In the health sector, we will acquire PT Nayaka, which provides healthcare services. At present, the company has a contract to provide healthcare services to Jamsostek members,” he said during the hearing.

“Jamsostek also plans to acquire PT Nakartrans, which provides recruitment services,” he added.

In the expansion of the banking sector, Hotbonar said the company was considering increasing its ownership in Bank Syariah Bukopin to 51 percent from the current share of 10 percent. He expected the bank could support Jamsostek’s programs to provide affordable house credits for its members.

In 2010, Jamsostek’s total investment is expected to increase by 8 percent to Rp 88.4 trillion ($9.45 billion). Jamsostek investment director Elvyn G. Massasya said the company would invest most of the funds on bonds. “We will place Rp 40 trillion or 46 percent of the total investment on bonds, mostly the government’s bonds,” Elvyn said.

According Elvyn, the government’s bonds carry fewer risks compared to corporate bonds.

Besides bonds, the company will also place about Rp 23.3 trillion of the investment funds in bank deposits, Rp 17.6 trillion in equity, Rp 4.9 trillion in mutual funds, Rp 785 billion in property and Rp 902 billion in direct investment. This year, the company expects to book investment returns totaling Rp 9.01 trillion from Rp 8.5 trillion last year. (ind)

Govt to offer bonds worth Rp4 trillion on Feb 9

Antara News, Saturday, February 6, 2010 06:42 WIB

Jakarta (ANTARA News) - The government will offer rupiah-denominated bonds of Rp4 trillion in an auction next Tuesday to meet part of financing target in the 2010 state budget, the finance ministry said.

The bonds up for the auction will have a nominal value of Rp1 million per unit, it said in a statement on Friday.

The bonds are series SPN20110210, FR0031, FR0040 and FR0052. The last three bonds are the reopening of the existing issues.

The discount rate bonds series SPN20110210 will mature on February 10, 2011.

The fixed rate bonds series FR0031 carry a coupon rate of 11 percent and will mature on November 15, 2020. Payments for the coupon will be made every May 15 and November 15.

The fixed rate bonds series FR0040 carry a coupon rate of 11 percent and will mature on November 15, 2025. Payments for the coupon will be made every March 15 and September 15.

The fixed rate bonds series FR0052 carry a coupon rate of 10.50 percent and will mature on August 15, 2030. Payments for the coupon will be made every February 15 and August 15.

The statement said the bonds will be offered in an open auction using a multi-price method.

Pertamina Shortlists Banks for $1.5 Billion Global Bond Sale

Bloomberg, by Bambang Djanuarto and Shelley Smith

Jan. 21 (Bloomberg) -- PT Pertamina, Indonesia’s state oil company, shortlisted banks to help it sell as much as $1.5 billion of global bonds.

“We’re still on track to issue a $1.5 billion global bond, but we’ll be looking at the market and the price,” Vice President Director Omar Anwar said in a phone interview from Jakarta today. “We’ve shortlisted some banks from the 20 proposed.”

Pertamina, whose profit in 2010 may rise to 20 trillion rupiah ($2.15 billion), is spending about $400 million to build two liquefied natural gas terminals in West Java and East Java. Indonesia’s President Susilo Bambang Yudhoyono, who won a second term in July in part on his promise to double spending on power plants, roads and ports, has pledged to deliver average annual economic growth of at least 6.6 percent over five years.

Pertamina said in November it planned to sell about $1 billion in dollar-denominated bonds in 2010 as it seeks to buy and develop oil fields to boost production. The company also plans to sell more than 1 trillion rupiah of bonds this year to finance capital spending, it said.

The $1.5 billion of bonds will be sold on the strength of Pertamina’s 2009 financial report, to be completed at the end of June, Anwar said.

Indonesia last week sold $2 billion of 10-year bonds at a higher yield than a sale earlier this month by the similar-rated Philippines, after scaling back the offering and canceling plans to sell 30-year debt.

To contact the reporter on this story: Bambang Djanuarto in Jakarta at bdjanuarto@bloomberg.net; Shelley Smith in Hong Kong at ssmith118@bloomberg.net.

Strong Demand in Indonesia For 2009’s Biggest IPO

The Jakarta Globe

The country’s biggest initial public offering this year, by state-owned PT Bank Tabungan Negara, has been massively oversubscribed, State Owned Enterprises Minister Mustafa Abubakar said on Friday.

BTN, the country’s largest home loan creditor, is offering 2.36 billion shares to the public, amounting to 27 percent of its equity. The share price has been set within a range of Rp 750 to Rp 1,100 (8 cents to 11 cents) per share, meaning BTN will raise between Rp 1.8 trillion and Rp 2.6 trillion.

The IPO attracted Rp 3.5 trillion of subscriptions, Mustafa said.

“BTN’s offer has been well received by potential investors during the road show,” he said.

BTN will offer the shares to investors on the primary market on Thursday and Friday, followed by a listing on the Indonesia Stock Exchange (IDX) on Dec. 17.

The state-owned bank has allocated 60 percent of the stock offered to local companies, with international buyers allocated the remaining 40 percent.

Several large investors have already committed to purchase sizeable stakes, Mustafa said.

“PT Jamsostek [a state-owned social security provider] is one of the biggest buyers of the BTN stock. We welcomed Jamsostek’s move because it will be positively accepted by local investors,” he said.

Jamsostek manages funds worth about Rp 78 trillion.

“The Government of Singapore Investment Corporation is one of the potential large international buyers,” Mustafa said.

The Singaporean government’s global investment management company manages around $100 billion. It invests in equities, fixed income, natural resources, treasury and currencies, real estate, and infrastructure.

BTN’s IPO has been delayed for several years as it waited for approval from the House of Representatives, which it received last year.

The bank said in a statement that all of the proceeds from the IPO would be used to support lending expansion in the coming years.

“This year we expect credit growth of 25 percent, while next year we hope it will grow by 20 percent,” said Iqbal Latanro, president director of BTN.

BRI plans to sell Rp 3t of bonds in December to boost lending

Nani Afrida, The Jakarta Post, Jakarta | Thu, 11/26/2009 1:28 PM

Bank Rakyat Indonesia (BRI), the nation's second largest lender by assets, will aim to sell five-year and 10-year subordinated bonds worth up to Rp 3 trillion (about US$318 million) between December 10th and 11th to finance lending.

"The bonds carry a coupon rate of between 10 percent and 11.9 percent. They will be issued in December," BRI finance director Sudaryanto Sudargo told a media expose on the bond sales on Wednesday.

He said that the yields for the five-year and 10-year bonds were set 9.4 percent and 10.3 percent, respectively.

According to Sudaryanto, the bonds will officially be listed on the secondary market as of Dec. 17 at the Jakarta Stock Exchange (IDX).

"The rating agency PT Pefindo has given the bond issue an AA+ with a stable outlook," he said, adding that the lender had appointed PT Danareksa Sekuritas, PT Bahana Securities and PT Mandiri Sekuritas as underwriters.

The so-called book-building period, a process to help in part to gauge investor interest, has begun on Nov. 25, to last until Dec. 4.

According Sudaryanto, BRI would use the proceeds from the bond sales to help finance its credit expansion.

"The company is issuing the bonds to strengthen our capital adequacy ratio *CAR* and expand our business," he said, rejecting speculation that the bank would acquire smaller banks in the near future.

The bank's CAR, which compares a lender's capital with its risk-weighted assets including loans, is hovering at between 13.5 percent and 14.5 percent.

Next year, the lender is targeting a 25 percent growth in lending, higher than the estimated 22 percent growth this year - already far above the 15 percent average lending growth target for the banking industry for 2009.

With this lending growth target, BRI estimates to post at least a 15 percent rise in net profits next year with profits to hit about Rp 6 trillion.

This year, as of September, net profits have reached Rp 5.3 trillion, on the back of a 26.9 percent growth in lending. The BRI loan portfolio outstanding as of September reached Rp 219.56 trillion.

Govt to auction Rp2 Trillion bonds Nov 17

Antara News, Thursday, November 12, 2009 22:43 WIB | Economic & Business

Jakarta (ANTARA News) - The government will offer rupiah-denominated state bonds of Rp2 trillion in an auction on November 17, a Finance Ministry official said.

Proceeds from the issuance of the bonds, all of them reopening of the existing issues, will be used to meet part of the financing target in the 2009 state budget, the ministry`s director general of debt management, Rahmat Waluyanto, said in a statement on Thursday.

The bonds up for auction will be series FR0031, FR0040 and FR0052.

The fixed rate bonds series FR0031 due on November 15, 2020 will be issued at a coupon of 11 percent to be paid every May 15 and November 15.

The fixed rate bonds series FR0040 to be issued at a coupon of 11 percent will mature on September 15, 2025. Coupon payments will be made every March 15 and September 15.

The fixed rate bonds series FR0052 due on August 15, 2030 will be issued at a coupon of 10.50 percent to be paid every February 15 and August 15.

"The government has the right to sell the three types of bonds at higher or lower prices than the indicative amount," Rahmat said.

Indonesia bond exchange to reduce refinancing risks

Reuters, 03.30.09, 07:55 AM EDT

JAKARTA, March 30 (Reuters) - Indonesia will offer investors the opportunity to exchange short-dated rupiah debt for longer-dated paper, the finance ministry said in a statement on Monday, in a bid to reduce refinancing risks.

The ministry plans to swap government bonds maturing in 2009-2012 with fixed-rate bonds FR0034, which mature on June 15, 2021 and have a 12.8 percent coupon.

The government will offer to sell the 12-year bonds at 101.5 percent of par value. The debt traded at around 99.5 trade on Monday.

Debt analysts, however, said the debt exchange offers an opportunity for investors to take profits by selling short-dated paper following a recent rally, and to switch to longer-dated bonds amid expectations of lower inflation.

'Bonds have rallied sharply in recent weeks,' said one Jakarta-based bond trader.

'It's a good time to take profits now.'

For the government, the bond exchange offers a chance to extend its debt maturity profile and reduce refinancing risks if the global capital markets experience further bouts of turbulence and upheaval, analysts said.

Indonesia's government, which faces elections this year, has announced a 73.3 trillion rupiah fiscal stimulus package to boost growth and counter the impact of a global economic slowdown.

With the budget deficit forecast at 2.5 precent of gross domestic product this year, the government has turned to the bond markets for funding and has so far raised more than two-thirds of its gross debt issuance target for this year.

The central bank cut its key interest rate by 50 basis points to 7.75 percent earlier in March, bringing total cuts this year to 150 basis points to support economic growth.

The central bank lowered its growth forecast to 3 percent for this year, down from 6.1 percent last year.

(Reporting by Adriana Nina Kusuma and Tyagita Silka; Editing by Sara Webb)

((ga.arka@thomsonreuters.com; Reuters Messaging: ga.arka.reuters.com@reuters.net; +62 21 384 6364 ext 911)) Keywords: INDONESIA ECONOMY/DEBT

(If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

BTN to issue mortgage-backed securities worth Rp 1 trillion

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Tue, 03/24/2009 11:20 AM

State-run Bank Tabungan Negara (BTN) plans to issue up to Rp 1 trillion (US$86.39 million) worth of mortgage-backed securities within the first half of 2009, BTN treasury director Saut Pardede said Monday.

“We plan to issue Rp 500 billion [of mortage-backed securities], but may increase it by up to Rp 1 trillion depending on the situation,” he said.

Last month, BTN issued the country’s first ever Rp 100 billion of mortgage-backed securities, popularly known as KIK EBA, a move Saut said was “testing the waters”.

He added the securities would have a tenure of between three and seven years, with yields based on the government bonds rate with a maturity period of between three and seven years.

The government and Bank Indonesia have signed a joint decree to boost home loans through the sales of mortgage-backed securities, to help provide decent housing to low-income people and to develop the secondary mortgage market.

State-sanctioned PT Sarana Multgriya Finansial will act as a secondary mortgage facility. This way, banks can get their money back faster and disburse loans quicker to people wanting to buy low-cost houses or apartments.

Saut said BTN would put up as collateral housing and apartment projects so that the securities would have an AAA grade rating.

In addition, BTN also plans to issue Rp 1.5 trillion of senior debts for credit expansion. The bank aims to have a lending growth of 14 percent this year.

Saut also said BTN wanted to buy back Rp 250 billion of bonds the bank issued five years ago. The bonds will mature in 2014.

“If we don’t do the buyback, the interest will rise, increasing the cost of funds. The buyback won’t affect our capital adequacy ratio [CAR],” he said, adding the central bank had approved BTN’s plan.

Also on Monday, BTN president director Iqbal Lantaro announced the bank would cut the mortgage loan rate by 50 percentage points to 14 percent starting from April 1.

Last year, BTN booked a 13 percent increase in profit to Rp 722 billion from Rp 640 billion in 2007. Asset value rose 22.6 percent to Rp 44.9 trillion in 2008 from Rp 36.7 trillion in 2007.

Lending growth surged 43.34 percent to Rp 32 trillion in 2008 from Rp 22.3 trillion in 2007. Bad loans remained healthy at 2.6 percent in 2008 compared to 2.8 percent in 2007, still below the BI maximum tolerance of 5 percent. Third party funds also rose to Rp 31.4 trillion in 2008 from Rp 24.1 trillion in 2007.

Indonesia's Federal International Finance plans bond

Wed Mar 11, 2009 10:53pm EDT  

JAKARTA, March 12 (Reuters) - Indonesian motorcycle financing firm, PT Federal International Finance (FIF) plans to raise 600 billion rupiah ($50.12 million) from a bond sale in April to use for working capital, the company said on Thursday. 

PT Indo Premier Securities, PT Kresna Graha Sekurindo and PT Trimegah Securities have been appointed to underwrite the bonds, which will be offered between March 18-April 3, it said in a prospectus published in Bisnis Indonesia newspaper. 

Federal -- owned by PT Astra International Tbk (ASII.JK), the country's largest automotive distributor -- said the bonds would be divided into three series with maturities ranging from 370 days to 36 months. 

The company, which mainly provides financing for Honda (7267.T), had not yet decided the coupon rate for the bonds. 

Indonesia's benchmark interest rate has fallen to 7.75 percent from 9.25 at the end of last year, which could encourage more consumers to turn to financing companies to pay for new cars and motorcycles. 

After breaking sales records last year, Indonesia's annual domestic vehicle and motorcycle sales dropped in January, by 23.5 percent and 22 percent respectively, as Southeast Asia's biggest economy slowed. 

Federal said its motorcycle financing last year rose about 16.7 percent to 11.9 trillion rupiah. 

($1 = 11,970 rupiah) (Reporting by Dicky Kristanto; Editing by Ed Davies)

Indonesia gets $5.5 billion in loans to plug budget deficit and stimulate economy

Aditya Suharmoko, The Jakarta Post, JAKARTA | Thu, 03/05/2009 10:54 AM  

Indonesia has officially agreed US$5.5 billion of loans from Australia, Japan, the World Bank  (WB) and the Asian Development Bank (ADB) to help fill shortfalls in  the state budget, as well as to stimulate the weakening economy. 

Australia supplies $1 billion and Japan $1.5 billion, WB supplies $2 billion and ADB $1 billion.

The loans, coming under the Public Expenditure Support Facility (PESF), will only be used if  the government fails to raise enough funds from bonds and other borrowing. It is also known as a deferred drawdown option (DDO) scheme.

“The DDO means the money can be used when it’s needed and it’s not all spent at once. It can be  spent at other times as the need arises,” WB  acting country director Chris Hoban said in a press conference on  Wednesday.

The WB loans are payable over 24.5 years, with  a 10-year grace period for repayments, the Washington-based lender said in a statement.

Australian Ambassador to Indonesia Bill Farmer said the finalization of their loan would be made this month, and the funds would be available starting in April.

“We’re in the middle of finalizing the details.”

As to the loan from Japan, it will be available as  a guarantee on the yen-denominated bonds Indonesia plans to sell. Should Indonesia cancel the Samurai bond plan, the loan will be converted to an ordinary loan to help finance the budget deficit.

Finance Minister Sri Mulyani Indrawati and Japanese Parliamentary Secretary for Finance Shinsuke Suematsu forged the loan deal during the special ASEAN+3 Finance Minister’s meeting in the Thai resort island of Phuket on Feb 21.

The ADB has not revealed any details over its loan pledge yet.

Liquidity shortages in the global financial market have forced the Indonesian government to turn to multilateral and bilateral  deals to ensure its budget financing remains intact should it fail to raise needed funds from the regular market.

Mulyani said the $5.5 billion in loans could be drawn down up to 2010, and would be “enough” to finance the gap in this year’s budget.

She said the loans would only be used if the government failed to issue and sell enough bonds to finance gaps in the budget.

The predicted budget deficit stands at Rp 139.5 trillion ($11.6 billion). The government last month sold $3 billion of medium-term notes to help plug the budget gap.

According to the Finance Ministry, the government has so far issued Rp 56 trillion worth of bonds.

Mulyani said that aside from the deficit, the loans would also be used to  help maintain the financial sector and sustain public expenditure, as well as supporting exports -- all of which are crucial so as to ensure that the economy can expand by 4.5 percent this year, as planned.

The loan will be on top of the Rp 73.3 trillion economic stimulus package approved recently by the House of Representatives.

Meanwhile, Mulyani also said the G-20 (group of finance ministers and central bank governors from the world’s 20 largest economies) should approve a planned $200 billion package designed to help emerging markets cope with the deepening global economic crisis.

“What we expect from the G-20 meeting (in London next month) is a more concrete commitment, such as some hundreds of billions of dollars that can be mobilized to support developing and poor countries,” she said.

The G-20 nations include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the US, and UK , with the EU also present.

Indofood plans to issue bonds worth Rp1 trillion

Jakarta (ANTARA News) - Indonesia`s food giant PT Indofood Sukses Makmur Tbk (INDF) plans to issue bonds worth Rp1 trillion to repay its maturing bonds worth Rp976 billion. 

The plan to issue the bonds is still under consideration, INDF Corporate Secretary Werianty Setiawan said on Tuesday. 

The value of the bonds will be a minimum of Rp1 trillion, depending on the market conditions, she said. 

Part of proceeds from the issuance of bonds will be used to repay short-term debts and strengten working capital, she said. 

To issue the bonds, the company will appoint PT DBS Vickers Securities Indonesia, PT Danareksa Sekuritas, PT ING Securities Indonesia, PT Kim Eng Securities, PT Mandiri Sekuritas, and PT OSK Nusadana Securities Indonesia as joint lead underwriters, she said.

Retail sukuk bonds a hit with investors

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Tue, 02/24/2009 10:54 AM  

The volume of  the new government retail sukuk (Islamic bonds) absorbed by individual investors is exceeding government expectations. 

That was according to official figures released by the Finance Ministry on Monday. 

The government managed to book orders of up to Rp 5.56 trillion (US$ 496.4 million) of retail sukuk in less than a month, or about 3 times its initial target of Rp 1.77 trillion as originally submitted by 13 designated selling agents. 

“It’s an example of how dynamic the financial market conditions are ... “ Finance Minister Sri Mulyani Indrawati said in a press conference. 

It was the first retail sukuk bond ever issued by the government.

 

 JP/IRMA

The selling agents are Bank Mandiri, Bank Syariah Mandiri, Citibank N.A., HSBC and Bank BII, as well as Danareksa Sekuritas, CIMB-GK Securities Indonesia, Reliance Sekuritas, Trimegah Securities, Andalan Artha Advisindo Sekuritas, Anugerah Securindo Indah, BNI Securities, and Bahana Securities. 

They had set a low target taking into account potential concerns of  investors over financial instruments during a financial downturn. 

“We’ll sell our bonds as long as the price is rational, and the profile won’t burden the state budget. We’ll always cope with the dynamic market conditions,” Mul-yani added. 

The retail sukuk is part of the government’s effort to plug the budget deficit, which is forecast to reach Rp 136.9 trillion, or 2.6 percent of the gross domestic product, this year. 

According to the Finance Ministry, 14,295 investors have so far ordered retail sukuk, 42 percent of whom are residing in Jakarta. 

A large proportion of these investors, 46 percent of them, ordered a retail sukuk purchase of less than Rp 100 million in total. 

The retail sukuk is sold at Rp 1 million per unit, with a minimum purchase of Rp 5 million. The yield is 12 percent, maturing on Feb. 25, 2012. 

Most of the investors are working as civil servants, private employees, housewives and entrepreneurs. Private employees ordered the largest bulk of purchases, equivalent to about 39 percent of the total volume of the retail sukuk, so far. 

Mulyani said the largest single purchase of retail sukuk amounted to Rp 35.3 billion, while the lowest single purchase was Rp 5 million. 

The Finance Ministry named Mandiri and HSBC as the best selling banking outlets, and then Trimegah and Andalan Artha as the best securities outlets. 

The retail sukuk will be on offer until Feb. 25. It can then be traded after being listed on the

Indonesian stock exchange as of Feb. 26. 

The government is still also considering selling international sukuk bonds and medium term notes (MTN) in the coming months. 

Bond issues are a government  option for securing funds to help cover the state budget deficit.

Japan guarantees RI’s first samurai bond

Rendi A. Witular ,   THE JAKARTA POST ,   PHUKET, THAILAND  |  Mon, 02/23/2009 10:55 AM  

In agreement: Finance Minister Sri Mulyani Indrawati (right) and Japanese Parliamentary Secretary for Finance Shinsuke Suematsu shake hands after signing a financial sector deal in the Thai resort island of Phuket on Saturday. JP/Rendi A. Witular

Japan agreed Saturday to provide financial support worth US$1.5 billion for guaranteeing Indonesia’s planned yen-denominated bond, known as the samurai bond. 

Finance Minister Sri Mulyani Indrawati and Japanese Parliamentary Secretary for Finance Shinsuke Suematsu forged the guarantee deal during the special ASEAN+3 Finance Minister’s meeting in the Thai resort island of Phuket. 

Mulyani said the bond, which would be Indonesia’s first ever, was aimed at helping the government plug this year’s widening budget shortfall after it planned to unload more funds to stimulate the economy amid the global economic hard times. 

“The fund will be provided in the form of a guarantee by the Japanese Bank for International Cooperation (JBIC) to the Indonesian government in issuing yen-denominated foreign bonds in the Japanese capital market,” Mulyani said. 

“Under the deal, if the bond fails to lure the appetite of Japanese investors, and the yield is deemed too expensive for the Indonesian government to bear, Japan can convert the fund into ordinary loans to help cover the budget deficit.” 

Mulyani could not provide the exact timing for the issue, saying it would depend primarily on the condition of the global financial sector. 

Indonesia, Southeast Asia’s largest economy, will need to link the samurai bond with the JBIC because the country’s sovereign investment rating is insufficient for the issue, according to the Finance Ministry’s head of fiscal policy, Anggito Abimanyu. 

The JBIC has AAA rating. 

While primarily aimed at keeping the budget deficit in check, Anggito said the bond proceeds or the loans would be allocated mostly to finance trade and projects linked to Japan. 

The Finance Ministry’s director general for budget management, Anny Ratnawati, said last week

the deficit would swell to Rp 136.9 trillion ($11.1 billion), or 2.6 percent of the country’s GDP, from a previous forecast of Rp 129.5 trillion, or 2.5 percent of the GDP. 

Aside from the guarantee facility, Mulyani also said Japan had agreed to help the stability of the Indonesian economy and complement its current strong position of foreign reserves by upgrading the size of the existing bilateral swap arrangement. 

Under the Chiang Mai Initiative, Japan and Indonesia will double the swap deal to $12 billion.

The initiative was inked in Thailand in 2000, aimed at creating a network of bilateral swap arrangements among ASEAN+3 countries to address short-term liquidity difficulties in the region and to supplement existing international financial arrangements. 

ASEAN+3 includes the 10 members of ASEAN — the Philippines, Indonesia, Thailand, Malaysia, Singapore, Brunei, Vietnam, Myanmar, Cambodia and Laos — as well as the three East Asian nations of Japan, China and South Korea. 

The bigger swap allocation will strengthen Indonesia’s foreign currency reserves in case of a sharp depreciation in the rupiah against the US dollar. Latest central bank data shows Indonesia’s foreign exchange reserves currently stand at $50.87 million. 

Bank Indonesia uses the reserves to supply the financial market with the greenback, making sure the volatility in the rupiah can be maintained at favorable levels. 

The rupiah has been losing ground over the past weeks, hovering at above Rp 12,000 per dollar, higher than the Rp 11,000 earmarked under the planned revision of this year’s state budget, as banks shop for more dollars to pay for derivatives deals with exporters. 

While the declining value of the rupiah is in part good for exports, it creates a greater harm, especially for the country’s ability to pay dollar-denominated government and private sector debts, as well as the ability to finance international trade. 

“The deal with Japan, which is a very progressive move, can ease speculation in the rupiah because Indonesian foreign currency reserves are getting bigger and stronger. This will boost confidence in the market and in the businesses,” Mulyani said. 

She added Japan was ready to take part in a joint contingent loan facility for Indonesia, which is being elaborated by Indonesia and its development partners, including the World Bank, the Asian Development Bank and other countries. 

“Although the Indonesian economy remains sound, there’s still a need for a second line of defense in a bid to fully anticipate the worst from the impact of the global economic crisis,” she said.

Danareksa to sell Rp 300 billion of 2-year bonds

The Jakarta Post,  Jakarta | Thu, 02/19/2009 2:10 PM  

State investment company PT Danareksa plans to issue Rp 300 billion (US$25 million) worth of two-year bonds next month. 

In its announcement Wednesday, the bond would have a two-year maturity period with the offering to start between March 6 and 17, and a minimum order of Rp 5 million. 

The bond, which will have a fixed interest rate, is scheduled for a listing on the Indonesia Stock Exchange on April 15. 

Proceeds from the bond are aimed entirely at strengthening the company's working capital. 

Danareksa has appointed its unit Danareksa Securities as underwriter of the bond and Bank Mega as custodian. 

During the first nine months of last year, the company booked total revenue of Rp 263.4 billion and a good net profit of Rp 129.1 billion. 

Danareksa recorded a revenue of Rp 505.8 billion and a net profit of Rp 56.1 billion in 2007 as against Rp 334 billion of revenue and a Rp 98.4 billion net profit in 2006. 

The company assets worth of Rp 3,3 trillion as of 2007, up by 53 percent from 2,15 trillion in 2006. 

Danareksa has said earlier it is targeting to underwrite bond issues worth between Rp 5 trillion and Rp 7 trillion during the first semester of the year. 

The bonds will be issued by state power company PT Perusahaan Listrik Negara, and state lender Bank Tabungan Negara. 

Aside from Danareksa Securities, the company also has four other subsidiaries including PT Danareksa Investment management, PT Danareksa Finance, PT Danareksa Futures, and PT Danareksa B.V. 

Late last year, State Minister for State Enterprises Sofyan Djalil said the government was considering Danareksa should become the holding company for banks in which the government had a majority share. 

Under the central bank's single presence policy, an investor, either from the public or private sector, is not allowed to own a majority stake in more than one bank. Those controlling stakes in more than one bank must merge their banks, conduct an acquisition or establish a holding company at the latest by 2010.

Astra to boost used car sales to avoid market decline

Ika Krismantari, The Jakarta Post,  Jakarta | Wed, 02/18/2009 2:06 PM  

Car financing firm PT Astra Sedaya Finance (ASF) will develop its used cars business to help keep the industry afloat amidst anticipated financing difficulties. 

ASF president director Djoni Bunato Tjondro said on Tuesday the company would expand its used car business as demand for new cars is due to fall as the slow down impacts on people's purchasing power. 

He said that ASF, a subsidiary of diversified business giant PT Astra International, would increase the proportion of used car sales up to 30 percent of its targeted 74,000 sales for the year, equal to 22,200 cars. 

Last year, ASF's proportion of used cars was pegged at 20 percent of 91,000 sales, equal to 18,200 units. "The prospects for the used car business will be attractive because demand for new cars will drop, and from our last year's portfolio business, the segment has yet to be fully tapped," he said. 

The Indonesia Automotive Industry Association (Gaikindo) targets that new car sales will decline by 33 percent to 405,000 units this year from 605,000 units last year due to weakening purchasing power. 

More than 80 percent of Indonesian customers buy vehicles through credit schemes. It is predicted that most of them will face some difficulties paying their monthly instalments due to rather high interest rates set by financing companies. 

Data from the Indonesian Financing Company Association (APPI) show that financing firms are still offering interest rates of 18 to 20 percent despite central bank rate cuts, with the latest cut leaving the benchmark rate at only 8.25 percent. 

APPI forecasts that the financing industry will face bleak prospects this year with loan volume declining by 26 percent to Rp 100 trillion (US$8.5 billion) from an estimated Rp 135 trillion previously. 

This gloomy outlook is also shared by ASF, which targets loan disbursements for car purchases to decline to as little as Rp 9 trillion this year from a total of Rp 11 trillion estimated for 2008. 

Despite these alarming business conditions, the company will try to keep its nonperforming loan (NPL) rate at a level below 2 percent this year, Djoni said 

Last year, ASF's NPL stood at 1.27 percent, down from 1.8 percent recorded in 2007. 

In an attempt to mobilize funds for auto loans despite the global financial crisis, ASF also announced a plan to issue bonds worth Rp 600 billion. It is the tenth time the company has issued bonds to the market. Last year, ASF issued bonds with a value of Rp 1 trillion. 

ASF Finance director Hugeng Gozali said ASF's new proposed bond issue is a part of company strategy to keep business rolling.

RI stock exchange to alllow short selling again

Jakarta (ANTARA News) - The Indonesian Stock Exchange (BEI) will reallow short selling transactions in the near future after freezing then in October last year for allegedly causing turmoil in the country`s money market. 

"BEI will allow short selling transactions beginning May 1, 2009 but it will be subject to a new regulation," director for share trading, research and development of BEI Sembiring said here on Monday. 

Short selling transactions at the BEI sparked pros and cons among market players after the stock market experienced turbulence last year. 

Sembiring said that in line with its plan to permit short selling transactions again, BEI had invited 120 bourse members to popularize a BEI regulation on short selling and margin transactions. 

The BEI official said that BEI in April would issue a list of margin shares, short selling stocks and securities based on the criteria of the new regulation. 

Sembiring said that of the 120 bourse members invited only 116 attended the socialization of the new regulation. 

"BEI will continue to popularize it to market players so that they would understand the requirements between that for the margin transactions and short selling transactions," Sembiring said.

Online media most reliable source of info: survey

The Jakarta Post | Tue, 02/10/2009 3:40 PM  

Online media ranks as the most reliable source for news by businessmen in Indonesia, a survey says. 

The survey, conducted by Edelman Trustbarometer on 200 businessmen with a minimum income of Rp 30 million a month, says that 41 percent of its respondents voted for online media as the most reliable source of information, 40 percent voted television and 36 percent voted for company management reports. 

Edelman director Aditya Chandra Wardhana said the survey showed that most of the businessmen surveyed depended a lot on fast access to information in their decision making process. 

The businessmen, he said, thrived on breaking news related to government policies or events that had global reprecussions that could affect their businesses. 

"After they get the information, the would contact analysts," he said. 

The survey also shows that 77 percent of the respondents said that mass media is the most trusted source of information, more so compared to corporate, government or NGO reports. 

The Edelman survey has been carried out for 10 years and has an error margin of five percent. (and)

Indonesia to go ahead with planned global bond - minister

Forbes.com, 02.06.09, 05:56 AM EST 

JAKARTA, Feb 6 (Reuters) - Indonesia's planning minister said on Friday that the government would go ahead with a global bond issue, which rating agencies estimate could raise as much as $4 billion. 

Indonesia, which started marketing the bond issue on Feb. 2, has already secured some $5-$6 billion in standby loans from various multilateral agencies to help finance its budget deficit. 

'We must go ahead,' Planning Minister Paskah Suzetta told reporters when asked whether the government will proceed with the debt sale. 

'The standby loans are only for emergency purposes. 

(Reporting by Dicky Kristanto; Editing by Sara Webb)  

(ga.arka@thomsonreuters.com; Reuters Messaging: ga.arka.reuters.com@reuters.net; +62 21 384 6364 ext 911)

Bakrie mulls IPOs for subsidiaries to repay debts

Ika Krismantari, THE JAKARTA POST, JAKARTA | Wed, 01/28/2009 11:19 AM  

Embattled PT Bakrie & Brothers, an investment holding of the politically wired Bakrie family, is planning to sell units via initial public offerings (IPOs) to repay debts. 

The company will take these measures should its plan to sell Rp 4.26 trillion (US$384 million) worth of convertible bonds to Northstar Pacific Partners fail to get approval  from shareholders and regulators, according to Bakrie & Brothers director Ari S. Hudaya on Tuesday. 

Bakrie & Brothers is due to have a meeting of shareholders to get the go-ahead in April or May.

“The Bapepam-LK (Capital Market and Financial Institution Supervisory Agency) and the shareholders must approve the issue. There’s a possibility we won’t get the go-ahead. If this happens, the restructuring will take more time,” he said. 

“But we have prepared several options (to settle the debts), including from dividend flow (of Bakrie subsidiaries), an expectation of higher prices on our stocks and IPOs for our non-publicly listed companies.” 

While refusing to name the companies ready for the IPOs, Ari merely hinted that the units would include those in the infrastructure and construction sectors. 

Bakrie & Brothers non-publicly listed units include among others PT Bakrie Pipe Industry, PT South East Asia Pipe Industries, PT Seamless Pipe Indonesia Jaya, PT Bakrie Construction, PT Bakrie Corrugated Metal Industry, PT Bakrie Building Industries and PT Bakrie Tosanjaya. 

Bakrie & Brothers will issue the Rp 4.26 trillion bonds to Northstar as a standby buyer that will be convertible into as many as 42.6 billion shares, equal to a 31 percent stake in Bakrie & Brothers, at a price of Rp 100 to Rp 110 a share. 

The deal with Northstar, a local arm of US buyout company Texas Pacific Group, is to help Bakrie & Brothers restructure debts and retain control of its main bread and butter earner PT Bumi Resources -- Asia’s largest thermal coal exporter. 

The bonds, scheduled for issue in May and to be converted into shares by the end of the year, will then replace a Rp 4.26 trillion loan the company owes to Northstar. 

Northstar helped Bakrie to settle $575 million of debt to Odickson Finance, a subsidiary closed to Gunawan Yusuf’s Sugar Group Companies, last December linked to a deal  whereby Bakrie should issue  bonds. 

Bakrie & Brothers minority shareholders are concerned their stake may be diluted due to these steps. 

Ari, however, said the company would stick to its initial plan to sell convertible bonds as this move was thought to be more beneficial to shareholders than the sale of assets. 

Bakrie & Brothers is scheduled to submit the bond proposal to Bapepam-LK in February at the latest. 

“Amid the current market conditions, I doubt whether it’s a good time for the bond issue. But Northstar is ready to be the standby buyer,” said Ari. 

In response to the recent controversy over Bumi’s purchases of coal producers PT Pendopo Energi and PT Fajar Bumi Sakti, and mining service firm PT Dharma Henwa for a combined Rp 6.1 trillion, Ari insisted that these purchases must proceed despite the current investigations by Bapepam. 

Ari, who is also Bumi’s president director, dismissed allegations that these acquisitions might be bogged down by conflicts of interest and concern over possibly overvalued selling prices. 

Bapepam chairman Fuad Rahmany said Tuesday the regulator was investigating the deals to see whether they were substantial enough to require Bapepam approval. 

Bumi’s purchases will be financed by 70 percent loans and 30 percent from equity, according to Ari.