BNI to issue up to Rp 1 trillion in bonds in June

BNI to issue up to Rp 1 trillion in bonds in June

Dadan Wijaksana, The Jakarta Post, Jakarta

Publicly listed Bank Negara Indonesia (BNI), the country's second
largest bank, is set to issue sub-ordinated bonds worth up to Rp
1 trillion (US$117 million) in May or June, to help strengthen
capital and finance credit expansion.

The move would form part of BNI's business plans, which
included a rights issue and secondary offering later this year,
president Sigit Pramono said on Wednesday.

"The bond offering will take place before the rights issue and
secondary offering, and is expected to be worth between Rp 500
billion and Rp 1 trillion," Sigit said at a seminar here.

The bank and the underwriters for the bond issue JP Morgan and
Bahana Securities were still discussing the exact amount, Sigit
said.

The company has said earlier that it expected to rake in Rp 1
trillion from the rights issue, which means issuing new shares to
be sold to public investors, while it also plans to raise cash to
further strengthen capital by selling up to a 30 percent stake in
the stock market under the secondary offering mechanism.

"But since the secondary offering will not take place until
around September, the bond issue will proceed first in about May
or June."

The proceeds of the bonds issue, expected to carry a 10-year
maturity profile, would be used mostly to finance the bank's plan
to extend this year's credit of Rp 6 trillion, higher than the Rp
5 trillion credit extended last year.

However, as to whether the rights issue and secondary offering
would be executed separately or at the same time, Sigit said it
would be decided at the bank's annual shareholders meeting.

As of last year, BNI outstanding credit totaled Rp 40
trillion.

For this year, about half of the total new credit target would
be allocated for the corporate sector, while the credits for
consumer and retail sectors would make up the rest, Sigit said.

This was all was part of efforts to meet the bank's income
target of Rp 3 trillion for this year.

Aside from credit financing, the bonds issue proceeds would
also strengthen the bank's capital, which was hurt by Rp 1.7
trillion in lending frauds last year.

The case had forced BNI to allocate Rp 1.3 trillion in
provision, reducing the bank's capital.

This would be reflected in the 2003 financial reports to be
issued in near future.