JAKARTA. A number of issuers have prepared some funding schemes to launch business expansions in 2017. The big corporations will raise the funds through bank credit, rights issue, as well as releasing rupiah and global bonds.
The issuers, which are ready to launch expansions including PT Bumi Serpong Damai Tbk (BSDE), PT PP Properti Tbk (PPRO), PT Siloam Hospitals Tbk (SILO), PT Jasa Marga Tbk (JSMR), and PT Semen Indonesia (SMGR).
SMGR even has prepared US$ 4.26 billion of capital expenditure to fund the expansion until 2019, including US$ 1.06 billion of capital expenditure in 2017. The business expansion consists of the establishment of new cement factories in Rembang (Central Java) and Indarung (West Sumatra).
In June 2016, the cement producer SMGR obtained Rp 3.96 trillion of syndicated loan from Bank Mandiri. SMGR allocated Rp 3.46 trillion and Rp 500 billion of the funds to investment credit and capital expenditure, respectively.
Furthermore, the issuer will release bonds to cover capital expenditures. “We prefer to release rupiah bond, since 97% of our revenues are in rupiah so that it is relatively secure from fluctuating currency exchange”, said corporate secretary of SMGR Agung Wiharto.
Financial Director of PT Kalbe Farma Tbk (KLBF) Vidjongtius said that an issuer needs to consider its revenues and the funding objective in determining alternative funding instruments, such as as the funding denominated (in rupiah or foreign currencies) and the funding duration (short term or long term). “The funding instruments can be bank commercial credit, bonds, right issues, and others”, said Vidjongtius.
Vidjongtius added, issuers may select rupiah bond for a long term financial instrument, or bank credit for a short term financial instrument.
Investor Relations of PT Astra International Tbk (ASII) Tira Adrianti said that ASII currently prefers to have bank credit as funding instrument.
“Theoretically, a stronger rupiah may cause a low swap cost from foreign currency to rupiah. If the interest rate decreases, bank credit is supposed to decrease as well”. Tira added.
Analyst at Danareksa Sekuritas Lucky Bayu Purnomo said that recently, rights issue is the most profitable funding instrument compared to other instruments, thanks to the solid Jakarta Composite Index (JCI).
Analyts at First Asia Capital David Sutyanto estimated that bank credit is more attractive than bond as funding instrument. Currently, bank offers lower credit interest rate compared to bond rate. However, he suggested the issuers not to take bank credit in a long term. (Translator: Muhammad Farid)
