BI set to exchange $2.7b in bank foreign debts

BI set to exchange $2.7b in bank foreign debts

JAKARTA (JP): Bank Indonesia (BI) said yesterday it expected
to exchange US$2.7 billion in domestic bank external debt due
this fiscal year with new longer-term loans from foreign
creditors.

The central bank said in a statement that all the
preconditions for the completion of the "interbank exchange
offer" had been satisfied.

The offer, made between July 2 and Aug. 13, allows for
Indonesian bank external debt maturing in the fiscal year ending
March 31, 1999, to be exchanged for an equal amount of new loans
with maturities of one year to four years and guaranteed by BI.

The central bank said the exchange offer represented about 84
percent of the total outstanding bank debt "eligible" for the
interbank exchange offer.

Eligible debts exclude derivative and contingent debt
obligations.

"In the initial stage, the exchange offer will take place as
scheduled on August 25," BI said.

To facilitate the interbank debt exchange offer, the central
bank had appointed Deutsche Bank as exchange agent.

BI explained the successful completion of the exchange offer
would significantly help "reduce pressure on the rupiah, restore
local banks financial condition and accelerate the recovery
process of the crisis-hit economy".

The central bank said the interbank debt exchange offer was
part of the Frankfurt agreement between local private debtors and
foreign creditors in June.

The Frankfurt agreement also deals with trade finance-related
debts and restructures corporate debts over eight years,
including a three-year grace period.

The government installed the Indonesian Debt Restructuring
Agency (INDRA) early this month to help restructure about $64
billion in corporate external debt.

Under the INDRA mechanism, the private sector will install its
monthly interest and principal obligation in rupiah to the
agency, which will pay back foreign creditors in foreign
currencies. (rei)