DJ Indonesia/PGN/Bond -2: On Roadshow In London

DJ Indonesia/PGN/Bond -2: On Roadshow In London

Dow Jones Jakarta

Indonesia's PT Perusahaan Gas Negara, the state-owned natural gas utility, said on Wednesday it may delay pricing its planned US$200 million bond offering to give it time to assess the effect of a deadly bomb attack in Jakarta on investor sentiment.

Tuesday's bomb in the JW Marriott Hotel, which killed at least 14 people, came as PGN officials were in London on the last leg of an international roadshow to market its planned 10-year dollar-denominated bond.

The company had said previously it was expecting to price the bond this week after finishing a two-week roadshow.

"Now we don't yet know. We're waiting for the market's reaction to the bomb," Joko Pramono, PGN's finance director, told Dow Jones Newswires in a telephone interview from London.

State-owned oil and gas company Pertamina, however, said it remains on schedule to tap global bond markets later this year.

The Marriott Hotel bombing has sparked fears among investors that Indonesia's economy remains at risk from terrorism. The attack came ahead of Thursday's verdict in the trial of a key suspect in last year's Bali bombing, which killed 202 mainly foreign tourists. Officials say Jemaah Islamiyah, a regional terrorist network with links to al-Qaida, carried out the Bali attacks.

The government has arrested scores of Jemaah Islamiyah members since the Bali attack in October last year, helping to restore investor confidence, and allow companies like PGN to issue bonds. Last month, state-owned PT Bank Mandiri was able to raise $320 million through an initial public offering, mainly to foreign investors.

But on Tuesday's bombing showed that terrorism remains a major threat to the economy, analysts say.

DJ Indonesia/PGN/Bond -3: Indosat Among Other Likely Issuers

Other Indonesian companies planning international bond offerings are: PT Indonesia Satellite, a telecommunications company controlled by a Singapore government investment firm; state-owned miner PT Aneka Tambang; and PT Bank Rakyat Indonesia, also state-owned.

The Indonesian government also plans to issue around $400 million, possibly as early as this year, to help fund its budget deficit in 2004.

Fears of further attacks could undermine these planned issues, with Indonesian stocks and the rupiah expected to remain under pressure in the short term, analysts say.

Stocks were up 1 percent at 493.616 points midday on Wednesday, while the dollar was 0.5 percent weaker at Rp 8,565. But both stocks and the rupiah were still weaker than levels before the bombing.

The local stock market has gained about 18 percent this year due in part to improved investor confidence over the security situation. A stronger rupiah has also allowed the government to reduce inflation, and lower interest rates. The government also officially announced last week that it plans to stop borrowing from the International Monetary Fund when its current program runs out at the end of this year.

For now, the government says it doesn't expect the economy to suffer from the latest blast, but investors are likely to be more cautious about Indonesia, analysts say.

PGN is hoping to price its bond, which offers a put option in 2010, to yield about 7.75 percent to the put date. Credit Suisse First Boston is the lead manager of the offering.

But the company may now have to offer a higher yield if it pushes ahead with the bond, analysts say.

Moody's Investors Service has assigned a B3 senior unsecured rating to the proposed issue. Standard & Poor's Ratings Services has assigned a B- foreign currency rating to the PGN bonds.