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Friday, November 13, 2009

Behind the coupon of Pupuk Kaltim's bonds


In the middle of passive appetite condition of domestic investors, PT Pupuk Kalimantan Timur (Pupuk Kaltim) decide let their bond II/2009 and sukuk I/2009's investor receive a 10.5% p.a. coupon. The investors already close their portofolio investment strategy earlier this year after booked high return since the economic turndown caused by global crisis last year.

Demand asked for the two kind of debt securities has 5 years tenures, which showed that the invesment instrument will matured in 2014, have shown that the investment appetite of domestic investors haven't fell to the lowest level.

The asked demand amount from the investors reach doubled of its original numbers, from it's earlier-decided size, IDR1.3 trillion, says someone who involve in the transaction. The demand, he said, reach Rp2.6 trillion.

"The book building process have settled the yield both for the bond and the ijarah sukuk," he said to by telephone interview, earlier this night.

Chief of Financial Officer of Pupuk Kaltim Eko Sunarko just read my text massage that I have sent earlier. He said the numbers haven't decided yet by the company and the underwriter. But the newspaper still must published in the morning, so his decline word can't be printed down.. (*My humble sorry pak Eko, the show must go on*). -- Please read Bisnis Indonesia newspaper daily this morning first or search it in bisnis.com, then read again this article.

The state-owned corporation must be greet the result, because another private bond issuer have decided to give their investors a far-bigger coupon, around 150 basis points (bps), or equals with 1.5% spread.

But their investors should asked the underwriter about the decision to make yield from the government bond 5 year tenured, FR00051 series, to become the counting basis for their coupon's yield.

The possibility cames to a conclusion. The series have a lower yield, that may made the management of Pupuk Kaltim doesn't have to lend high coupon to the insurance and pension fund investors, that have been the bond's most investor, around 40% -- 60%.

At least there are two things that not fit with the yield and arrangement. First of all, is about the liquidity that not as much as the other series that have a closer and fairer maturity date compared with the series, FR00026.

The FR00051 haven't trade much in high volume by traders and investors because it's have just issued by the Debt Management Office - Department of Finance at the begining of the year. And it is caused by the yield from the secondary market is not as high as other series with identical tenure.

The second one is about the tenure that doesn't close with the maturity date cause the FR00051 will mature in the beginning of 2014, far from the maturity date of Pupuk Kaltim's securities in November. And FR00026 have fairer time, that is longer than November, so it is has more significantly side for the investors than the other series.

But after all..the coupon nominals have decided. Even by the also-state-owned securities company that helped Pupuk Kaltim issues the bond and sukuk, PT Danareksa Securities, that easier to get investor in domestic areas, especially from also-state-owned kind of investors.

And like Yoda said in The Empire Strikes Back (1980), "So be it."

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