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Wednesday, February 10, 2010

Corporate bond issuance climbing up: Demand for Star Energy bond standing at US$1.1 billion

Saturday, 06/02/2010 00:00 WIB

Irvin Avriano A

Corporate bond issuance climbing up: Demand for Star Energy bond standing at US$1.1 billion

JAKARTA: Rupiah and US dollar corporate bond issuance nationwide stands at IDR11.54 trillion since early 2010 until yesterday increasing 424.58 percent as from IDR2.2 trillion last year.

The soaring bond sales mostly come from the oil, gas, and energy companies such as PT Star Energy that has just got book building of the US$350 million bonds with US$1.1 billion demand or 11.5 percent of the global investors.

Bond issuance of PT Cikarang Listrindo worth US$300 million also had oversubscription. Meanwhile, Pertamina readies to issue US$1.5 billion bonds.

Analyst of PT Macquarie Securities Indonesia Adam Worthington said the annual Indonesia economy growth which is currently at the level of 5-6 percent can grow up to 8-9 percent.

That still depends on the investment channeled through the power plant and toll road projects.

"The combination of stable political condition and investor demand for risk asset offering high yield has driven the mounting demand from global investors," he said as quoted by Bloomberg as saying yesterday.

The positive sentiment here is supported by the upgraded Indonesia debt rating to the top position along the decade by the Fitch Ratings from BB to BB+ level January 25.

The mounting rating is also bolstered by the lending rate cut nine times from May 2006.

The re-elected President Susilo Bambang Yudhoyono also promised the policy which allows business expansion to grow up. This will eventually rescue Indonesia from the major countries economy recession.

The upgrade of Indonesia debt has driven the other private corporate to issue global bonds at the global market.

PT Bakrie & Brothers Tbk plans to issue bonds related to stock worth US$150-200 million which will be assisted by the Credit Suisse and Nomura Securities.

PT Bakrie Telecom Tbk now prepares the US$200 million bond issuance this year.

Bond analyst of PT Trimegah Se?curities Tbk Octavianus Bra?man?tya said the rupiah denominated corporate bonds are now equal to that of last year worth at IDR29.41 trillion.

The corporate bond issuance in rupiah denomination will stand at about IDR25-30 trillion this year.

The rupiah bond will be issued early this year by the State Electricity Company (PLN) worth IDR3 trillion consisting of IDR2.7 trillion conventional bonds and IDR297 billion sharia bonds.

"There are two key factors this year, BI Rate which is not possibly to have too high rise and economy growth which might boost up the corporate business.

Edwin Chan, Credit research head of Asia regions of UBS AG, added if bank lending rate is believed to increase due to the growing economy, the companies will be optimistic to the prospect of budget consumption.

He said the general factor causing the corporation dare to offer high yield is that they need fund for business expansion and the fund is not likely attained from the financial market. (Bisnis/Wiw/Irvin Avriano A)

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