Bankers say RI debt plan may be delayed

Bankers say RI debt plan may be delayed

FRANKFURT (Dow Jones): Snags in negotiating Indonesia's US$64
billion of corporate debt to international lenders are likely to
cause a delay in the planned Aug. 6 implementation of the
country's overall debt-restructuring package, European bankers
say.

Two days before the July 23 deadline for extending maturities
of $8 billion to $9 billion of non-trade related debt of
Indonesian public and private-sector banks, bankers surveyed in
Europe told Dow Jones Newswires that much still needs to be
discussed on the separate corporate issues.

The bank and corporate debt restructuring plans are two
elements of an $80 billion agreement reached in principle between
Indonesia and a steering committee of international creditors in
June.

Bankers yesterday said they want all elements of the overall
package to be agreed before the restructuring takes effect.

For that reason, some bankers said they expect the July 23
deadline to be pushed back to accommodate the continued
negotiations.

In fact, it could take several months of discussions before
international bankers and their Indonesian debtors are willing to
sign off on all aspects of the deal, they said.

"The link between the bank-debt solution and the corporate
side of the plan has been neglected," said Erich Brogl, Dresdner
Bank AG's general manager of corporates and institutions.

The corporate portion, which seeks to restructure $64 billion
of Indonesian companies' outstanding debt, "is the most important
part (of the plan). It involves the most money," Brogl said. "And
yet nothing is done."

Bankers said an August 6 start date -- mentioned by Indonesian
government officials during their worldwide roadshow earlier this
month -- is quite unrealistic given the amount of details that
still must be worked out.

Bankers cite a lack of information flow from the bank steering
committee as well as scant details offered by Indonesian
officials.

There is a good chance some banks will opt out of the June
agreement. "We're still waiting to hear whether the (Indonesian)
companies will sign on," said one Amsterdam-based banker who
declined to be named.

"And we still don't understand how a lot of this will work or
whether we want to participate," he said.

Since the June agreement is voluntary for both Indonesian
corporations and their creditors, "it's crazy to think all" $64
billion will be successfully restructured, Brogl added.

A major problem, bankers said, is that Indonesian companies
are hesitating to lock in an unfavorable dollar-rupiah exchange
rate, and that participation in the program could therefore be
low.

The bulk of the debt outstanding is denominated in dollars.
As it stands, the program will provide Indonesian companies
dollars in exchange for rupiah for the next eight years at a rate
derived from the rupiah's strongest levels in the 11 months after
the company signs up for the program.