Bond emissions in the 2009 beyond stock: Danareksa Sekuritas leads bond underwriting market

as published in Bisnis Indonesia daily newspaper

Monday, 18/01/2010

Bond emissions in the 2009 beyond stock: Danareksa Sekuritas leads bond underwriting market

JAKARTA: Bond securities underwriting business rose 108.29% during the past year, beat the underwriting for shares that fell as much as 69.8%.

Bloomberg's data showed the value of data of stock offering underwriting in the capital market only reached Rp16, 15 trillion in 2009, fell 33.44% compared to the position in 2008 that reach Rp24, 27 trillion.

Shares underwriting which covers theinitial public offering (IPO) and underwriting of buying and selling shares of large-scale (block trading) through the crossing transaction.

If those number added with the issuance of new shares from rights issue, the value of the stock underwriting activity in a Indonesia Stock Exchange (IDX/Bursa Efek Indonesia) reached Rp20,58 trillion or lower as much as 69.8% from the value of the underwriting in 2008 that reach Rp68, 14 trillion.

But the shares underwriting numbers still a contrast with the value of bond underwriting which soared 108.29% to Rp34, 67 trillion last year, from the value of emissions Rp16, 65 trillion in 2008.

President Director of PT Pemeringkat Efek Indonesia (Pefindo) Kahlil Rowter said the condition showed private companies tend to choose selling debt securities as the main financing options last year, compared with the emission of shares.

"Many factors affect such as interest rates and the large amount of bonds maturing in 2009 which needs to be refund again [refinancing]. But in general, the bond market last year was restored and strengthened in the second half," he said to Bisnis yesterday.

Interest rates last year was recorded down 275 basis points, to 6.5% in December 2009. Hunting action by foreign investors to government bond securities (surat utang negara/SUN) from developing countries in the middle of the recovery that protracted last year leads push down of yield of government bond and private bonds to fell in the low level.

Bisnis notes yield from 5 years government bond stands at the level of 11.8% in the early 2009 and touched the lowest point of 8.98% in the last year.

The increase in emissions also occur in new markets bonds, islamic bond securities, sukuk, with a value of emissions in 2009 for about Rp20, 17 trillion, grows 42.75% from the positions worth Rp14.13 trillion in 2008.

Bond emission values in the 2009 have exceeded that was recorded in 2007 for Rp31, 27 trillion who soars before the global financial recession hit the world. That figures include the U.S. dollar bonds denominated who risen by Indonesian companies which listed in foreign countries.

PT Danareksa Sekuritas recorded lead the positions as rupiah bond underwriter, who handling the sale of bonds worth Rp7, 4 trillion from 35 issuers. That number represents a 21.3% share of the national bond market.

Stock market

Analyst PT GMT Asset Management Niko Simatupang said the falling of stock emission rate activity last year indirectly is the impact of high global stock market fluctuations.

"The capital owners choose to invest in save haven instrument who had of lower risk than stocks, that could be bonds or fixed income instruments. Not surprisingly, demands for bonds emissions flood in the 2009," he explained.

In the midst of such conditions, Bloomberg noted the increased activity of additional shares emission with exponential jump from Rp297 billion to Rp12, 3 trillion, especially from a large value transactions (block trades).

The value of shares of emissions in 2009 were recorded only Rp16, 15 trillion, with the number of listed companies 19 companies, down 5.26% from the 2008 position of 18 issuers. Emission of new shares (IPO) are done by 13 companies worth Rp3, 85 trillion, fell 84% from the IPO in 2008 for Rp24 trillion. (arif.gunawan@bisnis.co.id/redaksi@bisnis.co.id)