BTN to raise Rp 3t for housing program

JAKARTA. State-owned lender Bank Tabungan Negara (BTN) is expecting to raise Rp 3 trillion (US$225 million) from a bond issue next month to finance the construction of 1 million homes and boost housing loans.

“We aim to support the government’s 1 million affordable homes project,” BTN president director Maryono said on Wednesday at a press conference in Jakarta.

The government, through the Public Works and Public Housing Ministry and state-owned housing developer PT Perumnas, plans to build 1 million homes for low-income people over the next five years, allocating around Rp 13 trillion from the state budget and Rp 500 million from the Social Security Management Agency (BPJS).

The lender’s July bond issue is the first of a two-part sustaining bond issue. The next issue will be next year, aiming to reap a combined Rp 6 trillion. The debt papers, which have received an “idAA” (double AA) rating from ratings agency PT Pemeringkat Efek Indonesia (Pefindo), will be offered on July 1-2 and listed on the Indonesia Stock Exchange (IDX) on July 8.

The book-building period began on June 9 and runs until June 18.

The bonds will consist of Series A maturing in 3 years with coupon rates of around 9.2 to 9.3 percent, Series B maturing in 5 years with 9.35 to 9.4 percent coupon rates, Series C maturing in 7 years with 9.5 to 9.7 percent coupon rates and Series D maturing in 10 years with 9.65 to 9.9 percent coupon rates.

BTN, the ninth-largest bank by assets, has mandated PT Bank Mega to manage the bonds and appointed PT BCA Sekuritas, PT CIMB Securities Indonesia, PT Danareksa Sekuritas and PT Trimegah Securities as underwriters for the bond issue.

“The housing development project will have multiple effects on other business lines in the country,” Maryono said. The project will start work this year to reduce the backlog in housing nationwide.

“Our backlog in housing amounts to 13.5 million units,” he said, adding that the government program and the upcoming loan-to-value implementation would boost housing construction.

According to director Iman Nugroho Soeko, the government cannot rely only on third-party funding (DPK) to finance the 1 million homes construction as DPK are short-term loans, while the construction needs long-term financing of around 15-20 years. “Bonds are more appropriate to finance the construction,” Iman said.

Aside from issuing bonds, BTN also plans to obtain soft loans from the Asian Development Bank (ADB), International Finance Corporation (IFC) and World Bank of $1.5 billion, according to Iman. “The talks are still ongoing,” he said.

The funds from the bond issue will also be used to finance BTN’s subsidized and non-subsidized homes, as an attempt to boost its housing loans. This year the bank is aiming to increase loans by up to 20 percent from the Rp 115 trillion it posted last year.

With core capital of more than Rp 9 trillion as of 2014, BTN is a BUKU III category lender, meaning that the bank has full license to operate in this country and is able to expand in the region. BUKU III category includes banks with core capital of between Rp 5 trillion and Rp 30 trillion.

BTN, which is 60.3 percent owned by the government and 39.8 percent by the public, posted a 15 percent increase in loans last year, mostly contributed by subsidized housing credits.