Bankers say RI debt plan may be delayed<\/p>\n
FRANKFURT (Dow Jones): Snags in negotiating Indonesia's US$64
\nbillion of corporate debt to international lenders are likely to
\ncause a delay in the planned Aug. 6 implementation of the
\ncountry's overall debt-restructuring package, European bankers
\nsay.<\/p>\n
Two days before the July 23 deadline for extending maturities
\nof $8 billion to $9 billion of non-trade related debt of
\nIndonesian public and private-sector banks, bankers surveyed in
\nEurope told Dow Jones Newswires that much still needs to be
\ndiscussed on the separate corporate issues.<\/p>\n
The bank and corporate debt restructuring plans are two
\nelements of an $80 billion agreement reached in principle between
\nIndonesia and a steering committee of international creditors in
\nJune.<\/p>\n
Bankers yesterday said they want all elements of the overall
\npackage to be agreed before the restructuring takes effect.<\/p>\n
For that reason, some bankers said they expect the July 23
\ndeadline to be pushed back to accommodate the continued
\nnegotiations.<\/p>\n
In fact, it could take several months of discussions before
\ninternational bankers and their Indonesian debtors are willing to
\nsign off on all aspects of the deal, they said.<\/p>\n
\"The link between the bank-debt solution and the corporate
\nside of the plan has been neglected,\" said Erich Brogl, Dresdner
\nBank AG's general manager of corporates and institutions.<\/p>\n
The corporate portion, which seeks to restructure $64 billion
\nof Indonesian companies' outstanding debt, \"is the most important
\npart (of the plan). It involves the most money,\" Brogl said. \"And
\nyet nothing is done.\"<\/p>\n
Bankers said an August 6 start date -- mentioned by Indonesian
\ngovernment officials during their worldwide roadshow earlier this
\nmonth -- is quite unrealistic given the amount of details that
\nstill must be worked out.<\/p>\n
Bankers cite a lack of information flow from the bank steering
\ncommittee as well as scant details offered by Indonesian
\nofficials.<\/p>\n
There is a good chance some banks will opt out of the June
\nagreement. \"We're still waiting to hear whether the (Indonesian)
\ncompanies will sign on,\" said one Amsterdam-based banker who
\ndeclined to be named.<\/p>\n
\"And we still don't understand how a lot of this will work or
\nwhether we want to participate,\" he said.<\/p>\n
Since the June agreement is voluntary for both Indonesian
\ncorporations and their creditors, \"it's crazy to think all\" $64
\nbillion will be successfully restructured, Brogl added.<\/p>\n
A major problem, bankers said, is that Indonesian companies
\nare hesitating to lock in an unfavorable dollar-rupiah exchange
\nrate, and that participation in the program could therefore be
\nlow.<\/p>\n
The bulk of the debt outstanding is denominated in dollars.
\nAs it stands, the program will provide Indonesian companies
\ndollars in exchange for rupiah for the next eight years at a rate
\nderived from the rupiah's strongest levels in the 11 months after
\nthe company signs up for the program.<\/p>",
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