Garuda Indonesia is looking to raise up to $900 million from dollar-denominated Islamic bonds, private placement or peer-to-peer lending next year. (Antara Photo/Feny Selly)

Garuda to Issue $900m in Global Bonds in 2020 to Restructure Debts

DECEMBER 16, 2019

Jakarta. Flag carrier Garuda Indonesia is seeking to raise up to $900 million from issuing dollar-denominated Islamic bonds, private placement or peer-to-peer lending next year.

Garuda needs more cash soon to pay back debts due in the next 12 months, the company said in a statement to Investor Daily newspaper on Monday.  

The airline issued dollar-denominated bonds to raise $500 million in 2015 that will be due in 2020.

Aside from maintaining cash flow, the transactions are also expected to improve "confidence among the airline's creditors, guaranteeing that [the airline's] debts would be paid in time," Garuda said in the statement.

The airline is still trying to find its footing again after a smuggling scandal that saw its top executives either suspended or fired.

State-Owned Enterprises Minister Erick Thohir suspended five Garuda directors and fired its chief executive I Gusti Ngurah Ashkara Danadiputra for allegedly smuggling a vintage Harley Davidson motorcycle and Brompton bicycles aboard a new Garuda Airbus being delivered to Jakarta last month. 

Garuda has capped proceeds from its dollar-denominated Islamic bonds (sukuk) and from private placement at $750 million. The cap for its peer-to-peer lending is $500 million. 

The transactions are subject to approval from the Financial Services Authority (OJK) and from Garuda's shareholders. The latter will sit to approve the plan on Jan. 22 during an extraordinary shareholders meeting.