New bond listings to decline by 40%

The Jakarta Post, Jakarta

The Surabaya Stock Exchange (SSX) expects new bond listings by the corporate sector to decline by 40 percent this year on political and security concerns arising from the general and presidential elections.

SSX director T. Guntur Pasaribu said that new corporate bond issues would only reach around Rp 15 trillion (US$1.64 billion) this year, down from Rp 25 trillion last year, as firms had decided to put off their issues until after the election season was over.

"There has been a decline in business confidence this year as indicated by the fall in the number of bond issues. But we expect bond issues by companies next year will boom again next year, like in 2003," said Guntur in a telephone interview on Thursday.

Indonesia, South East Asia's largest economy, held its legislative elections on April 5 and the first round of the presidential election on July 5. The country is scheduled to hold the presidential election runoff on Sept. 20, with the incumbent, President Megawati Soekarnoputri, squaring up against her former security minister, Susilo Bambang Yudhoyono.

Guntur said that between January and July of this year, bond issues by companies had amounted to around Rp 12.1 trillion, with several high profile companies expected to issue some Rp 3 trillion in bonds by the end of this year.

The companies include food companies PT Indofood Sukses Makmur and PT Suba Indah, cigarette producer PT HM Sampoerna, financial services firms PT Federal International Finance and PT Adira Multifinance, and house builder PT Pembangunan Perumahan.

The companies will be touting their first-half financial performances as the basis for the appraisal of their bond issues.

Guntur said the market capitalization of corporate bonds listed on the bourse totaled Rp 54 trillion, with an average daily transaction volume of Rp 65 billion.

Government bonds still dominated the market with total capitalization of Rp 390 trillion and average daily transaction volumes of Rp 2 trillion, he said.

In order to boost market capitalization and daily transaction volumes, the SSX plans to intensify promote investment in bonds to retail investors starting in the second semester of this year.

A number of securities firms, including Trimegah Securities and Danareksa Securities, are offering such products to individual investor for a minimum investment of Rp 25 million.