Bond of Pertamina could swell into US$1.5 billion: Some securities compete for bond issuance

as published in Bisnis Indonesia daily newspaper

Monday, 14/12/2009 00:00 WIB

Bond of Pertamina could swell into US$1.5 billion

Some securities compete for bond issuance

JAKARTA: PT Pertamina is likely to increase bond issuance value in US dollar denomination (global bonds) up to US$1.5 billion as from initial scheme of US$1 billion.

Some resources in capital market said the company has been inviting some overseas securities to hand over proposal dealing with the bon issuance in 2010.

"They have invited some overseas securities with expertise in global bond issuance. The deadline of proposal submission is December 21," said one of resources to Bisnis last week.

The resource also said the company opens chance to increase bond issuance value from former value of US$1 billion into US$1.5 billion.

Finance Director of Pertamina Ferederick S.T. Siahaan admitted that the company has jut invited 15 finance institutions to compete for being underwriter.

But he could barely provide details of the corporate scheme for increasing bond issuance up to US$1.5 billion.

An investment banker explained the invited companies here include CIMB Securities, Barclays Capital, and Citigroup.

Some other securities companies commonly posing as global bond underwriter domestically include Credit Suisse Securities, JP Morgan, Merril Lynch, UBS Securities, DBS Securities, and HSBC Securities.

When asked, Director & Head of Global Banking of Citibank NA of Indonesia branch office Kunardy Lie refuted to comment on the information.

Other investment banker considered global bond issuance will boost up the company to materialize the government plan of making state enterprises competitive in the regional level such as Petronas.

"Finance report system in bond issuance does not require full transparence so that the company must not be busy auditing the financial statement, or much easier than IPO scheme."

He admitted state enterprise finance report is very hard to audit and this becomes one of the corporate obstacles to issue bonds.

Formerly Ferederick said the company also opened chances to issue bonds in rupiah denomination worth more than IDR1 trillion in additions to the global bonds.

"The use of funds for some reasons like acquisition scheme of MAsela and investment in Cepu Block," he said last month.

The bond issuance here will also be done to meet the capital expenditure next year worth IDR39 trillion. Global bond issuance worth about IDR10 trillion here is meant to complete the corporate effort to seek US$2.5 billion funds.

Pertamina capital expenditure is focused on the oil and gas upstream business development such as field acquisition, development, and reserves increase.

"That is the total loan values consisting of rupiah and dollar and combination of commercial loans and bonds. For the dollar loans we need some US$1 billion of the total funds we are seeking out," he said. (Bisnis/21/nti)