BNI cancels dollar debt issue<\/p>\n
State-controlled Bank Negara Indonesia (BNI), the country's
\nsecond-largest bank in terms of assets, said it would postpone a
\nplanned dollar-denominated bond issue amid rising economic
\nuncertainty as a result of the falling rupiah.<\/p>\n
BNI president Sigit Pramono said the bank's plan to issue
\naround US$300 million in sub-debt bonds would be delayed until
\nthe third quarter of this year on fears that investors would
\ndemand overly high yields, thus raising the borrowing cost.<\/p>\n
\"We may not get the maximum benefit if we issue the bonds
\nbased as scheduled in June. The market is just not favorable. We
\nfear that we will have to pay higher rates and costs for the
\nissue,\" said Sigit after a meeting with legislators on Thursday.<\/p>\n
The BNI, which has appointed Barclays Capital and JP Morgan
\nfor the issue, previously said the issue was aimed at raising
\ncash to help strengthen its capital condition and finance credit
\nexpansion.<\/p>\n
The bank has decided to expand new lending to Rp 16 trillion
\nthis year, or 86 percent higher than in 2003. As of last year,
\nthe bank had channeled a total of Rp 46.4 trillion in loans.<\/p>\n
To support the expansion, the BNI needed to set its capital
\nadequacy ratio (CAR) higher. At present, its CAR stands at 18.17
\npercent, higher than the minimum requirement of 8 percent set by
\nthe central bank.<\/p>\n
BNI shares ended higher by Rp 50 to Rp 1,150 on the Jakarta
\nStock Exchange on Thursday.<\/p>\n
The BNI's decision to cancel its bond issue follows the
\ngovernment's recent move to delay bond sales after investors
\ndemanded high yields amid the falling rupiah, inflationary
\npressure and a possible hike in interest rates.<\/p>\n
The Ministry of Finance was scheduled to issue Rp 3.5 trillion
\n(US$388.46 million) worth of bonds on Tuesday, however, it only
\nreceived bids totaling Rp 3.1 trillion. Investors demanded an
\naverage yield of 11.74 percent, higher than the 10.72 percent
\nyield at last month's bond auction. -- JP<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bni-cancels-dollar-debt-issue-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}