Ciputra Property to issue notes worth $200 million

JAKARTA. Ciputra Property, part of major developer Ciputra Group, plans to issue multicurrency medium-term notes (MTN) amounting to a maximum of US$200 million, the company has said.

The statement, published on the Indonesia Stock Exchange (IDX) website on Tuesday, said that the publicly listed developer had signed on Monday a “programme agreement” with DBS Bank Ltd. regarding the MTN issuance plan.

The notes would be listed in Singapore, it added.

However, the agreement mentioned neither the exact amount of the MTN nor the interest rate set for the notes.

The exact value of the notes and the interest would be determined after the signing of a pricing supplement, the statement said. Details of the schedule of the notes issuance and the signing of pricing supplements are not available.

Ciputra Property said the amount of MTN to be issued would be between 20-50 percent of the company’s equity as of September last year.

The developer’s equity, according to its 2014 first nine-month financial result, stood at Rp 4.69 trillion, meaning the amount of MTN to be issued would reach at least Rp 938 billion ($74.64 million).

The company’s liabilities during the period were around Rp 3.63 trillion.

Ciputra Property corporate secretary Artadinata Djangkar refused to comment on the plan when contacted by The Jakarta Post.

MNC Securities analyst Reza Nugraha said the company’s move to issue MTN would likely be used for expansion, adding that companies were fiercely on the hunt for funding at this time of the year.

For some companies, the hunt for funding may be given new urgency by fears that the central bank might raise its benchmark interest rate later this year.

“It is only normal that Ciputra Property has decided to look for funding now, because once the interest rate is raised, the cost of funds for issuing notes might increase further and they may get no funding at all for future expansion,” Reza said.

The analyst added that he expected Ciputra Property to record up to 20 percent growth in sales and net profit this year, given improving property markets and with the developer’s mega project Ciputra World in South Jakarta beginning to generate profit.

The developer is also in the middle of the decade-long construction of the Ciputra World 1 and 2 mega-projects, which are located in one of Jakarta’s commercial hubs. The projects are estimated to absorb Rp 17 trillion and will comprise 15 towers.

Ciputra Property recorded a more than 37 percent decline in its net profits year-on-year to Rp 227.9 billion at the end of September last year, while its revenue for the same period remained stagnant at around Rp 1.1 trillion.

Its financial performance was in line with other developers, reflecting a market slowdown following the central bank’s latest loan-to-value regulation, as well as project hold-ups last year as a result of the legislative and presidential elections.

Ciputra Property, according to a Reuters report, plans to spend Rp 3.8 trillion to finance three projects this year, including a villa resort in Bali requiring Rp 1 trillion in investment. (Anggi M. Lubis)