Jakarta. State-owned construction firm PP launched a sale of perpetual bonds on Tuesday (17/04), aiming to raise Rp 1 trillion ($73 million) in the course of a year, a company executive said.
The perpetual bond issuance is the first in Indonesia and marks another effort by state companies involved in infrastructure projects to raise funding through unconventional instruments.
Companies such as toll road operator Jasa Marga and Wijaya Karya have raised funds through sales of the country's first ever London-listed, rupiah-denominated bonds. Jasa Marga also pioneered the sale of asset securitization in Indonesia last year.
Infrastructure development is a core part of President Joko "Jokowi" Widodo's economic agenda and state firms are taking up most government projects.
PP director Agus Purbianto said the bonds will have an annual interest rate of 8.25 percent and the proceeds from the bond sale would be used to fund current projects.
The government announced late on Monday that it plans to drop 14 infrastructure projects worth nearly $20 billion from its strategic development plan due to lack of progress. Analysts say this could help curb debt risks posed by overleveraged state firms, but could also possibly affect medium-term growth.