Four firms to launch ABS

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)