BNI gets top price for its $145 million Yankee bond issue

BNI gets top price for its $145 million Yankee bond issue

JAKARTA (JP): State-owned PT Bank Negara Indonesia 1946 has
got a good price for its US$145 million Yankee bond issue after
Indonesia's first sovereign issue last year.

BNI treasury director I Gusti Ngurah Antika said last night
the coupon rate for its BBB-rated 10-year deal was set at 6.625
percent a year -- 110 basis points above the U.S. Treasury rate.
BNI is the first Indonesian company to achieve this.

"The pricing of our bonds has been very much influenced by the
government's Yankee bond issue last year," Antika said during a
breaking of the fast gathering at his office.

Bank Indonesia, the central bank, acting on the government's
behalf, launched the $400-million Yankee bond issue on July 25.
The bonds were trading 100 basis points above Treasuries,
equivalent to 7.75 percent a year.

Antika said BNI bonds got a lower coupon rate than Bank
Indonesia's bonds because of Treasuries' declining coupon rate.
"We were just lucky."

The government had said its Yankee bond issue aimed to create
a benchmark for Indonesian corporations wanting to access
investors looking for high-yield bonds in the U.S. market.

Before this, Indonesian corporations entering the U.S. market
suffered from wildly fluctuating spreads. Many paid rates as high
as 600 or 700 basis points above U.S. Treasuries.

One example is Riau Andalan Pulp and Paper's BBB-rated 10-year
deal, which got 750 basis points above Treasury's in December
1995. But since Indonesia's sovereign issue Riau Andalan's bond
spreads tightened to 440 basis points.

Another beneficiary from the new benchmark is Sampoerna
International Finance Co., a financier for clove cigarette
manufacturer PT HM Sampoerna.

Last year the company issued $200 million worth of 10-year
guaranteed notes at 145 basis points above U.S. Treasuries and
with a Baa3/BBB investment rating.

BNI president Widigdo Sukarman said his bond issue had
received an "enthusiastic response" from investors. He did not
elaborate.

BNI's bond issue, underwritten by J.P Morgan Securities,
Salomon Brothers, PT BNI Sekuritas and Merrill Lynch, was done
through BNI's New York branch on Jan. 29. It was not listed on
the New York Stock Exchange.

Widigdo said proceeds from the bonds would be used for general
funding, especially to finance exports and imports.

The amount of funds raised in the bond issue would still be
within the ceiling limit the offshore loans monitoring team set.

The team sets the ceiling limit for foreign borrowing by state
owned companies. For 1996/1997 fiscal year it set the limit at
US$1 billion for the seven-state banks, of which BNI gets $145
million.

In previous years BNI issued floating rate notes to raise
offshore funds. But such notes had short maturity terms of
between five and seven years.

"Now, we are entering the Yankee bond market, merely to
diversify our funding sources," Widigdo said.

BNI is the largest bank in the country in terms of assets and
the first state-owned bank to list on local stock exchanges. The
bank's total assets were Rp 32.35 trillion (US$13.5 billion) last
June. (rid)