Bank Sumsel to issue Rp 200b worth of bonds

Evi Mariani, The Jakarta Post, Jakarta

The development bank of South Sumatra, Bank Sumsel, is to issue five-year bonds worth Rp 200 billion (about US$24 million) with fixed interest rates ranging from 14.25 percent to 14.75 percent per annum.

In announcing the issuing of the bonds on Monday, Bank Sumsel president Asfan Fikri Sanaf said that 85 percent of the funds generated from the bond offering would be used to refinance the bank's long-term consumer credits for civil servants. The remainder would be used for short-term consumer credit.

Asfan said that currently 70 percent of the bank's third-party funds were generated from short-term savings accounts, whereas more than 60 percent of its loans went to civil servants' long- term credits, such as those used to buy houses.

"Thus, there's a gap in the tenures of the bank's sources of funds and its loans. To reduce the gap we are issuing the bonds and the bond money will allow us to use the funds to finance productive credits," he said.

At the announcement, director Nazirwan Delamat told The Jakarta Post that the bond offering was expected to increase the bank's productive credits.

"Last year, the portion of productive credits was only about 30 percent of total credits. This offering is expected to raise it to 50 percent," he said.

The bonds are the first to be issued by Bank Sumsel, and will be offered on July 4, July 7 and July 8. Interest on the bonds will be paid every three months.

The underwriter for the bonds is PT Danareksa Sekuritas and the trustee is Bank Negara Indonesia.

Bank Sumsel, is rated triple B minus by credit rating company PT Pefindo, and projects to increase its loans from Rp 850 billion at the end of 2002 to Rp 1.2 trillion at the end of this year.