Indomobil Finance to issue Rp 300 billion in bonds

The Jakarta Post, Jakarta

Financing firm PT Indomobil Finance Indonesia (IFI) plans to sell Rp 300 billion (US$32.3 million) worth of bonds in October to help boost automobile sales.

The firm, which is the financing arm of Indonesia's second largest automobile distributor PT Indomobil Sukses Internasional, plans to use proceeds from the bonds to help finance the expansion of its business.

IFI president director Wiwie Kurnia told the press on Tuesday that the company, which provides financing for the purchase of cars and motorcycles, expected loans to reach Rp 1.4 trillion this year, a 100 percent jump from last year's volume.

Wiwie said that until August, the company had provided up to Rp 700 billion worth of loans, of which 60 percent went to motorcycle buyers and the remainder to car buyers.

The target, he added, would be equivalent to the sales of over 90,000 cars and 700,000 motorcycles.

The bond issue will have three options. The first one is worth Rp 50 billion and has a 370-day tenure, the second one is worth Rp 75 billion with a two-year tenure and the third totals Rp 175 billion with a three-year tenure.

Wiwie also said that the sale of the bonds, which were given an A rating by a local rating agency PT Pefindo, would be managed by PT Kresna Graha Sekurindo.

"We expect to collect Rp 310 billion in revenues and Rp 54 billion of net profit (this year)," said Wiwie, adding that the company had been collaborating with several banks in the provision of its loans, such as Bank Danamon, Bank Mega, BII and BCA.

For 2005, Wiwie said the company's financing volume would hopefully reach around Rp 2 trillion, which would also be supported by another sale of bonds worth Rp 750 billion.

Previously in 2000, another Indomobil financing arm, PT Swadharma Indotama Finance, issued Rp 150 billion in six-year bonds with a coupon rate of 18.25 percent.

Indomobil finances the sale of vehicles from a variety of leading brands, such as Suzuki, Nissan, Mazda, Renault, Audi, Volvo and Volkswagen.

Car sales have been on the rise this year amid strong household consumption bolstered by the availability of cheap loans due to lower interest rates. Car sales for this year are expected to reach a record of more than 420,000 units.