Wika Lists Komodo Bonds at London Stock Exchange

Indonesian Finance Minister Sri Mulyani witnesses Wika's listing debut at London Stock Exchange on Monday (29/01). (Photo courtesy of the Finance Ministry)

By : Sarah Yuniarni | on 11:59 PM January 29, 2018
Category : Business, Markets

Jakarta. State-controlled construction firm Wijaya Karya, or Wika, listed rupiah-denominated "Komodo" bonds worth Rp 5.4 trillion — around $405 million — at the London Stock Exchange on Monday (29/01), making it only the second company in Indonesia to have an overseas listing using the local currency.

The bonds' name is taken from the moniker for a giant prehistoric lizard that lives on Komodo Island in Indonesia's West Nusa Tenggara province.

The three-year bonds were offered with a 7.7 percent coupon rate at release and were oversubscribed 2.5 times.

The proceeds from the bond offering will be used to fund infrastructure projects, including a massive high-speed railway network connecting Jakarta and Bandung in West Java that Wika is already working on.

President Joko "Jokowi" Widodo has been pushing state-owned companies to finance their own projects to accelerate the country's ambitious $350 billion infrastructure plan.

The companies have had to deal with a lack of cash in recent years, and the government wants them to seek alternative sources of funding.

Finance Minister Sri Mulyani, who oversaw Wika's debut at the London Stock Exchange, said Indonesia's strong macroeconomic fundamentals and responsible budget have earned praise worldwide.

"Last year, S&P and Fitch both upgraded our [long-term sovereign bond] rating. That was the first time Indonesia received investment grade ratings from all three major credit rating agencies. This helped lower borrowing costs and gave investors confidence to put their money in Indonesia," Sri said in a statement on Monday.

"We always encourage innovative and creative financing, and the Komodo bond is certainly one of them," Sri said.

State-Owned Enterprises Minister Rini Soemarno meanwhile said her ministry has also been encouraging state-controlled companies to get more into innovative financing to meet the government's infrastructure goals.

"We're proud of Wika's achievement to have organized the largest ever rupiah-denominated global bond issuance. This shows the depth of the market for Komodo bonds, and also global investors' appetite for and trust in the bonds," Rini said.

State-controlled toll road operator Jasa Marga had also listed Rp 4 trillion ($280 million) worth of Komodo bonds at the London Stock Exchange on Dec. 13.

Its three-year bonds were offered with a 7.5 percent coupon rate and oversubscribed more than four times.

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