Four firms to launch ABS

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) has received applications from four private Indonesian companies to launch asset-backed securities (ABS) into the local capital market.

Bapepam chairman I Putu Gede Ary Suta said yesterday that the four firms would be the first companies to float asset-backed securities on the local stock exchanges.

Asset securitization is still new in Indonesia even though many Indonesian banks and financial firms have floated their asset-backed securities through foreign markets.

Unlike in Western countries like the United States, he said, there had been a tremendous shift from traditional financial institutions, such as banks and finance companies, toward investment vehicles such as money market funds and ABS.

Putu also stressed the need to have a Special Purpose Vehicle (SPV) to accommodate the sale of ABS on the Indonesian capital market this year.

"Any company can apply to become a SPV and we have received several applications so far," he told the press on the sidelines of a seminar here yesterday.

He said yesterday that the agency had yet to launch a new regulation to allow the SPVs to trade ABS in the domestic stock market later this month.

"A company that wants to become a SPV should have at least a minimum capital of Rp 25 billion," he said.

"ABS are still a new product in Indonesia. We should set the legal framework before trading the product in the market," he said.

Putu said that the SPV, which would function as an investment manager, could trade securities backed by bank loans and other corporate assets to investors.

He said that many banks and other finance firms in Indonesia had secured their assets through foreign companies.

"With the presence of ABS in Indonesia, it is expected that public investor awareness will increase," he said. (aly)