BII raises $140 million in securitization deal

BII raises $140 million in securitization deal

JAKARTA (JP): Publicly listed Bank Internasional Indonesia
(BII), a unit of the widely diversified Sinar Mas Group, has
raised Rp 364.11 billion (US$140 million) by issuing securitized
future credit card receivables to international institutional
investors in the offshore capital market.

Managing director for securitization at Citicorp International
Ltd. Eric D. Alsberg said yesterday that receivables were due
from Visa International Services Association and MasterCard
International Incorporated.

"The deal was priced at 140 basis points over the U.S.
Treasury rates in 10 years," he said after signing the deal here.

The deal was arranged by Citicorp International Ltd., a
subsidiary of Citibank.

He said demand for BII's securitization transaction, the first
of its kind in Indonesia, was strong because orders at the issue
price were more than $185 million.

"The higher demand reflects the confidence of foreign
institutional investors in BII and the future of Indonesia's
tourism and business travel industries," he said.

He predicted that sectors in Indonesia likely to be
securitized would include international telephone receivables,
merchant credit card receivables, airline ticket sales, workers
remittance flows, agricultural commodities, natural resources and
industrial resources.

BII president Indra Widjaja said proceeds from the deal would
be used for the bank's expansion program in the country.

He said housing credit and automobile loans were other BII
assets that may be securitized.

"We see these sectors as highly promising for securitization
in the future," he said.

Though asset-backed securities are still new in Indonesia,
more and more companies will seek to securitize their assets as
an alternative financial source to their operations in Indonesia,
he said.

"There is increased interest in securitization as a funding
alternative in the region," he said.

According to data complied by The Jakarta Post, six Indonesian
companies have issued asset-backed securities to finance their
operations.

They are Indonesia's largest automaker Astra International
which issued the securities with a transaction value of $200
million in August 1996, electricity company PT PLN worth $500
million in 1996, Citibank Jakarta $50 million in 1996, PT ABS
Finance worth $40 million in August 1996, PT Bunas Finance worth
$30 million in February 1997 and Bank Bira worth $20 million in
February 1997.

The U.S. investment bank company Salomon Brothers Inc.
predicted the transaction value of asset-backed securities in the
Asia-Pacific region would increase between $1 billion to $2
billion next year because more companies would seek to use debt
instruments to finance their operations.

Indra Widjaja said that BII had 230,000 credit card holders as
of June, 1997, up from 180,000 in 1996.

"That constituted a 10 percent share of the credit card market
in Indonesia," he said.

He said BII's total credit card receivables was Rp 300 billion
a month.

He said BII, which posted a net profit of Rp 260 billion in
1996, recorded a total unaudited net profit of Rp 200 billion in
the first half this year.

"That represented a 50 percent increase over the corresponding
period last year," he said. (aly)