Bank Sumsel to issue Rp 200b worth of bonds

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.