Bank Mandiri raises $125m from overseas market

The Jakarta Post, Jakarta

State-owned Bank Mandiri successfully sold US$125 million of five-year floating rate euro bonds on Thursday, marking the first overseas bond issue by a government-owned firm since the 1997 financial crisis.

The bank said in a press statement that the transaction was oversubscribed with 21 investors participating from Indonesia, Hong Kong, Singapore, Japan, Europe and the United Kingdom.

It said that the notes, with three-year put and call options, were rated B- by Standard & Poor's, two notches above the Indonesian sovereign.

President and CEO of Bank Mandiri ECW Neloe praised the execution of the issue, saying: "This is a ground-breaking transaction for both the bank and Indonesia.

"This marks the return of the Indonesian government's risk to the international investor community after an absense of nearly five years."

Bank Mandiri used a Hong Kong branch of the Hong Kong and Shanghai Banking Corporation Limited (HSBC) as mediator for the transaction.

Nick Green, HSBC Head of Investment Banking and Markets in Jakarta also welcomed the issue, saying it should serve well to revive investors's confidence in the country.

Analysts said that the success story could encourage other cash-strapped Indonesian corporations to tap funds from the international market.

Set up in 1998 through the merger of poorly performing state- owned banks, Bank Mandiri is currently the country's largest bank with a total assets of Rp 236.6 trillion (some $23 billion), as of September, the equivalent of around 23 percent of total assets of the country's banking system.

It also employs more than 17,000 people across the country and has 719 ATMs (Automatic Teller Machines) serving more than six million customers.