Indonesia debt roadshow to start on Wednesday

Indonesia debt roadshow to start on Wednesday

NEW YORK (Dow Jones): Indonesia will kick off on July 8 in New York a roadshow to market a plan to exchange between $8 billion and $10 billion in debt contracted by the country's financial institutions into new loans, a source familiar with the offer said Thursday.

The exchange program is part of a broader agreement between the country and foreign creditor banks to tackle Indonesia's debt burden.

After New York, the roadshow will move on to Paris on July 9, Frankfurt on July 10, Tokyo on July 13, Seoul on July 14 and Singapore on July 15.

Under the bank debt deal reached in Frankfurt in early June, creditors of Indonesian banks have the option of rolling over existing credits into new loans with maturities of one, two, three and four years with respective yields of 2.75 percent, 3 percent, 3.25 percent and 3.5 percent. The new loans will be guaranteed by Indonesia's central bank.

IMF Managing Director Michel Camdessus last week wrote to international banks urging them to back the agreement to roll over Indonesian private debt.

During the roadshow, Indonesian officials and International Monetary Fund representatives will also market a plan to rollover existing trade financing arrangements, the source said.

That plan covers between $4.2 billion and $4.4 billion in debt. In June, foreign creditors banks agreed in principle to maintain trade financing at existing levels.

Also to be discussed during the roadshow will be Indonesia's plan to restructure more than $60 billion in corporate debt via a new agency dubbed INDRA.

Under the INDRA plan, the Indonesian central bank will provide foreign exchange risk protection to Indonesian corporations which agree with their creditors to restructure their external debt for a period of eight years with a three-year grace period during which no principal will be repaid.

But sources cautioned that progress on that portion of the debt deal will be slow.