Wika Eyes $400m From Komodo Bonds


JANUARY 16, 2018

Jakarta. State-controlled construction firm Wijaya Karya is preparing to issue rupiah-denominated global bonds as part of a plan to raise Rp 5.3 trillion ($400 million) to fund its infrastructure projects.

In a filing to the Indonesia Stock Exchange (IDX) on Monday (15/01), the company said it would undertake an overseas roadshow between Tuesday and Friday this week to promote the bonds. However, it did not provide any further detail.

The proceeds from the debt offerings, known as Komodo bonds, will be used to finance the company's long-term projects, acquire land, purchase a minority stake in another company and also to refinance debt.

President Joko "Jokowi" Widodo named the global rupiah-denominated bonds after a species of giant lizard indigenous to Komodo Island in the eastern part of Indonesia.

Investment bank BNP Paribas, The Hongkong and Shanghai Bank Corporation (HSBC), Mandiri Securities and MUFG Securities Asia will act as initial purchasers of the debt offerings. Initial purchasers typically buy securities from issuers but do not have the same responsibilities as underwriters.

The government has been pushing several state-owned companies to finance the country's infrastructure projects by seeking alternative funding to realize the current administration's ambitious $350 billion infrastructure plan.

Wika's biggest project, the high-speed railway connecting Jakarta and Bandung in West Java, has been seen frequent delays and slow progress due to cash constraints. Proceeds from the Komodo bonds should help accelerate the project.

State-controlled toll road operator Jasa Marga issued Komodo bonds worth $300 million in December last year. The bonds, with a three-year maturity, were oversubscribed more than four times and are now listed on the London Stock Exchange.

Aside from Wika, state-owned utility company Perusahaan Listrik Negara (PLN) also plans to issue Komodo bonds by the end of the first half of this year. The company seeks to raise about $2 billion to finance the development of the country's electricity infrastructure.

PLN will use the proceeds to support President Jokowi's 35,000-megawatt power development plan and also to refinance its debt.