Jasa Marga to raise Rp 400 billion in bonds

The Jakarta Post, Jakarta

State-owned toll operator PT Jasa Marga plans to issue Rp 400 billion (about US$39 million) worth of bonds to finance the construction of vital toll roads, including the link between the West Java towns of Cikampek and Padalarang.

Jasa Marga plans a combination of floating and fixed coupon rates for its bonds which carry a maturity period of eight years.

The offer period would run from April 4th through April 7th, the company's prospectus published in the daily Bisin Indonesia on Wednesday said.

Of the Rp 400 billion, it said, some 31.15 percent was earmarked for the development of the Cikampek-Purwakarta toll project.

Another 29.12 percent would be invested in the construction of the Padalarang bypass.

The two projects are part of a Rp 1.5 trillion investment to link Cikampek with Padalarang, which would shorten the Jakarta- Bandung travel time from 3.5 hours to only two hours.

Jasa Marga would also set aside 34.91 percent of the bonds for improving the Pondok Aren and Ulujami toll roads.

Underwriting the bond issuance is PT Trimegah Securities.

Jasa Marga's new toll roads would mark the first infrastructure projects of this kind, since the government suspended them to better cope with the 1997 financial crisis.

Development of infrastructure like toll roads are deemed as vital to stimulate the economy between the regions they link.

Analysts said investors' appetite for toll road projects were high, but added that skepticism existed as to whether current toll tariff rates would make an investment feasible enough.

Jasa Marga said uncertainty over the toll tariff rates was one risk bondholders would be facing.

Other risks, it added, were the clearing of land on which the toll roads would run, and the absence of a master plan for the development of toll roads.