JAKARTA. Ahead of the last quarter of this year, some issuers set to release global bond in order to settle the debts, which will mature in the next years.
The coal mining issuer PT Delta Dunia Makmur Tbk (DOID) plans to issue an amount of US$500 million of bonds to cover the debts, which will mature in December 2019. To date, DOID has a US$507.39 million and US$13.16 million of debts to Sumitomo Mitsui Banking Corporation (SMBC) and PT Bank CIMB Niaga, respectively.
DOID prospectus shows that DOID set at maximum of 10% of interest rate for its global bonds. The rate is much higher than a 4.86%-5.83% annual rate of DOID debts to SMBC that amounted to US$602.697 million. The rate is also higher than a 4.26%-4.83% annual rate of US$15.53 million of DOID debts to CIMB.
Meanwhile, the subsidiary of Bumi Serpong Damai Tbk (BSDE), namely Prime Capital Pte Ltd (GPC) will release an amount of US$300 million of global bonds. BSDE will allocate US$225 million of the funds to settle the debts that will mature in 2020, and the rest of US$75 million to fund business expansion.
PT Kawasan Industri Jababeka (Tbk) or KIJA just released a US$186 million of seven-year tenor bonds. KIJA sets to allocate US$165.38 million of the funds convert its bonds that will mature in 2019, while the rest US$20.61 million of funds will be allocated to pay premium, early exchange fee, and consent free to bond’s holders that want to replace their mature bonds. This rime, KIJA gains profits from the issuance of 6.5% of bond coupon, which is lower than 7.5% of previous bond coupon.
Analyst at Minna Padi Investama Christian Saortua estimated that issuers have larger opportunities to reap large amount of global funds, rather than domestic funds. Recently, domestic banks are more selective in allocating funds due to the increase in non-performing loan (NPL).
Head of Research at NH Korindo Securities Reza Priyambada estimated that global bonds have attractive spreads. For an example, with the spread ranging around the rate of 2.5%, most investors are willing to purchase the bonds with 4%-5% of rate.
Reza added that the issuers may benefit from the stronger rupiah, on the grounds that issuers may have less number of debts in the US dollar nomination.
However, Director of Investa Saran Mandiri Hans Kwee reminded that the issuers need to consider the spread of global and domestic interest rate. According to Hans, the foreign exchange fluctuation may have potential risks to affect to issuers’ rating.
Therefore, investors need to consider the effects of foreign exchange fluctuation to their financial performance before deciding to buy shares of the issuers, which release the global funds.
(Muhammad Farid/Translator)
