Telkom Plans to Raise Up to Rp 7t from Selling Bonds in June
[This story was first published at 17:54 p.m. on Wednesday, May 17, 2015, and this update adds executive comments, background.]
Jakarta. State telecommunication firm Telekomunikasi Indonesia, known as Telkom, will issue its first 30-year corporate bonds in Indonesia, as parts of its effort to help finance its infrastructure development this year.
In a press conference on Wednesday, Heri Sunaryadi, finance director at Telkom said the company plans to raise up to Rp 7 trillion ($532 million) from selling several series of rupiah-denominated bonds next month.
This will be a first step in its greater plan to raise up to Rp 12 trillion over the next two years.
Telkom is offering seven-year bonds and plans to offer investors with annual coupon rates in the range of 8.91 percent to 10.16 percent.
It is also offering ten-year bonds at 8.96 percent to 10.31 percent; a 15-year bonds at 9.21 percent to 11.01 percent and last, a 30-year bonds — the longest term bonds the company ever offers — at 9.55 percent to 11.55 percent.
The estimated coupon rate of Telkom’s bonds ranged at a premium rate compared to its government-issued equivalents.
Data from the Indonesia Bond Pricing Agency (IBPA) showed that yield of the government’s seven-year stood at 7.9113 percent on Wednesday, while ten-year and 15-year bonds were 8.0395 percent and 8.2638 percent respectively. Yield on the 30-year government bonds was 8.5171 percent, according to IBPA.
Telkom’s 30-year bonds is the longest tenor issued by an Indonesian company, since the state power utility, Perusahaan Listrik Negara, offered 15-year bonds in 2007.
Bahana Securities, Danareksa Sekuritas, Mandiri Sekuritas and Trimegah Securities were appointed as underwriters for the debt papers sale.
“We’ve chosen to issue the 30-year bonds because the funds will be used towards infrastructure, which takes a long time to develop and monetize,” said Heri in Jakarta on Wednesday.
Telkom will offer the bonds on June 17 and 18 and list the securities on the Indonesia Stock Exchange (IDX) on June 24.
About 86.8 percent of the funds from the bond sale will be allocated towards Telkom’s infrastructure expansion, while the remaining 13.2 percent will be used for mergers and acquisitions.
Telkom’s network, information technology and solutions director Abdus Somad Arief said that the company is planning to allocate the funds for several main projects, such as the company’s fiber optic network across Indonesia, as well as the $250 million Indonesia Global Gateway submarine cable.
Stephanus Turangan, president director at Trimegah Securities, said that the bond sale seeks to attract clients with a “long-term appetite,” such as pension funds, insurance firms, as well as foreign investors.
However, Yudistira Slamet, head of fixed income research at Danareksa Sekuritas, showed a more pessimistic outlook on the sale, citing uncertain market sentiments due to the weak rupiah.
GlobeAsia
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