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Thursday, October 22, 2009

Indika intends to issue US$230 million bonds

Kamis, 22/10/2009 00:00 WIB
Indika intends to issue US$230 million bonds
Fitch gave B+ rating to the new bonds

JAKARTA: PT Indika Energy Tbk plans to issue US$230 million bonds or IDR2.18 trillion to cover capital expenditure particularly to develop PT Petrosea Tbk.

An informed executive said the bond issuance will be done through the subsidiary firm, Indo Integrated Energy II BV with Citi as the underwriter.

The bond is guaranteed by Indika Energy and other subsidiary firm, PT Indika Inti Corpindo. "Today Indika is scheduled to have road show on bond issuance abroad," he said to Bisnis yesterday.

Indo Integrated in April 2007 issued US$250 million bonds with 8.5 percent coupon per year. The sales of five year tenure bonds is assisted by ING and JP Morgan Securities.

Vice President & Investor Relations of Indika Energy Retina Rosabai was not available for comment on it.

Bond analyst of PT Trimegah Securities Tbk Octavianus Bramantya considered the US dollar denomination bond issuance will not hamper the similar issuance of some other emitters this year.

"The global bond has unlimited investors basis and thus it would be better if the market is not limited to regional ones but also to Asia, Europe, and America."

The institution fund like investment manager, hedge fund, private equity, and other global investor remain fairly significant if compared to the regional and domestic markets.

The inflow of foreign investors particularly from advanced to the developing countries following the low interest rate which could succeed the bond sales and other corporate.

Fitch Ratings today upgraded the rating of the long term foreign and local currencies of Indika Energy from B to B+ with stable prospect.

Fitch also rose the senior bond rating worth US$250 million matured by 2012 along with the expectation rating of B+ to the scheme of Indo Integrated Energy II bond issuance.

The growing rating reflected the soaring dividend significantly from PT Kideco Jaya Agung, the third largest coal debtor nationwide with its 46 percent shares are owned by Indika worth US$90 million in 2008 become into US$210 this year.

Fitch estimated the dividend will remain high value and stable as seen by the high coal price now and Kideco scheme to increase the production into 31 million tons by 2011 as from DIR22 million tons last year.

But Indika rating is still restricted to the status as holding company which gets some cash flow from dividend by Kideco.

The restriction could be mitigated with the agreement made by Kideco shareholders which ensure that all Kideco free cash flows will be distributed as the dividend and Kideco has got no debt.

The rising rating of the corporate also considers the acquisition of Petrosea which makes Indika business complete.

By end of June 2009, Indika had IDR2.5 trillion cash (excluding short term investment and cash with limited use).

Bond issuance will grow the corporate cash. The management plans to have expansion on energy sector.

Fitch predicted most corporate cash will be budgeted for the acquisition of energy sectors.

Stable prospect reflected the expectation of Fitch that Indika could maintain the loan profit with the support given by the cash flow growth despite the new debt. (Bisnis/wiw/21)

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