BPS postpones $100 million mortgage-backed securities<\/p>\n
JAKARTA (JP): Publicly listed Bank Papan Sejahtera (BPS) has
\npostponed launching its US$100 million mortgage-backed securities
\ndue to continued uncertainty over the country's monetary
\nsituation.<\/p>\n
Bank Papan president Al Nyoo said Saturday the launching of
\nwas initially scheduled this month through the Jakarta Stock
\nExchange.<\/p>\n
But the bank decided to postpone it because the current
\nmonetary upheaval could discourage investors from buying
\nsecurities, he said.<\/p>\n
\"We shall wait until the situation is back to normal,\" he
\nadded.<\/p>\n
Al Nyoo earlier said that issuing mortgage-backed securities
\nwould help the bank to minimize financial risks in the property
\nsector as it would get longer term capital to finance property
\nprojects.<\/p>\n
It was very risky to finance property projects -- which are
\nlong term investment -- with short term funds, he said.<\/p>\n
He said the planned mortgage-backed securities, destined to be
\nthe first issuance of the debt instruments by Indonesian
\ncompanies in the domestic market, would mature in five years and
\ncarry an annual interest rate of some 15 percent to 16 percent.
\nDanareksa and Deutsche Morgan Grenfell, a subsidiary of the
\nDeutsche Bank, would be underwriters.<\/p>\n
\"We offer 15 to 16 percent because they have to compete with
\nbonds in the market,\" he said.<\/p>\n
Unlike bonds which are backed by an issuing company, mortgage-
\nbacked securities are backed by property assets or trust deeds.
\nPrincipal and interest payments on the underlying mortgages are
\nused to pay the interest and principal on the securities.<\/p>\n
Regulations are still incomplete on issuing mortgage-backed
\nsecurities on Indonesia's stock market, especially on the
\nsecondary mortgage market.<\/p>\n
The 1996 Mortgage Law governs the use of land as security for
\nfinance, but the government has yet to issue a supporting
\nregulation on the law.<\/p>\n
The government is reportedly drafting the ruling to regulate
\nmortgage-backed securities transactions. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bps-postpones-100-million-mortgage-backed-securities-1447893297",
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