UOB to issue Rp 1.5 trillion bonds to boost loans

JAKARTA. Private lender Bank UOB Indonesia, owned by Singaporean banking giant UOB, is looking to raise up to Rp 1.5 trillion (US$117.07 million) from an upcoming bond issuance to help boost loans, the bank stated in an announcement published on Monday.

According to the announcement, UOB is looking to issue three series of debt papers — the A series with a maturity period of about one year, the B series with a maturity period of three years and the C series that will mature after five years.

No details about the coupon were immediately available. The debt papers have received an AAA (triple A) rating from Fitch.

UOB has appointed BCA Sekuritas, Indo Premier Securities, Mandiri Sekuritas, Standard Chartered Securities Indonesia and UOB Kay Hian Securities as underwriters for the bond issuance.

The bookbuilding period will run from Feb. 24 to March 10, during which time the bank and the underwriters will travel around to estimate demand from potential investors. Offers will be made from March 24 to 26. The bonds themselves will be listed on the Indonesia Stock Exchange (IDX) on April 1.

Funds generated from the bond issuance will be used to improve the bank’s productive assets, especially in the form of loan disbursement, according to the announcement.

UOB — which is 68.9 percent owned by UOB International Investment Private Limited and 30 percent controlled by United Overseas Bank Limited — also says that it will focus on disbursing loans to the retail sector, specifically small and medium enterprises (SME).

The bank has not officially published its audited report for the year 2014. However, according to its unaudited report submitted to the Financial Services Authority (OJK), UOB’s total assets reached Rp 80.41 trillion last year.

Its outstanding loans amounted to Rp 56.52 trillion. About 32.3 percent of that figure was channeled to the micro, small and medium enterprise sector, a 13.1 percent rise from its disbursement to the sector in 2013.

In terms of funding, UOB was able to record Rp 63.31 trillion in total third-party funds (DPK), comprising savings, time deposits and demand deposits.

A large chunk of the DPK, equal to 72.9 percent, came from time deposits, which were up 8.2 percent from 2013.

UOB president director Armand Bachtiar Arief previously said that the lender would pursue business targets within the range that had been set by both the OJK and Bank Indonesia, which estimates loan growth at 15 to 17 percent in 2015.

 “We cannot rush business as we did before because we are seeing economic slowdown,” Armand told The Jakarta Post after attending a meeting with the OJK.

He explained that the bank would look for opportunities to enter the government’s priority sectors, such as the maritime sector, agriculture and infrastructure, provided that the regulator offered a form of incentive.

Meanwhile, in a separate statement, Fitch said that UOB’s bonds were rated at the same level as the bank’s national long-term and short-term ratings in accordance with the rating agency’s criteria.

“UOBI’s [UOB Indonesia] rating reflects Fitch’s view of a high likelihood of timely support from its higher-rated parent, Singapore-based United Overseas Bank Limited, in time of need,” the statement read.

“This view is based on UOBI’s strategic importance to UOB’s business expansion in southeast Asia, 99 percent ownership, name association and operational alignment in most key areas,” Fitch said. (Tassia Sipahutar)