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)