Wed, 21 Jun 2000

Pegadaian to issue Rp 150b bonds

JAKARTA (JP): State-run pawnshop operator PT Perum Pegadaian will issue Rp 150 billion (US$17.6 million) bonds with an eight- year tenure in mid-July, the company's president Sjamsir Kadir said on Tuesday.

Sjamsir said proceeds from the bond issuance would be used to boost the company's operations in rural areas.

"The bonds carry a fixed interest rate of 15.625 percent per annum for the first year, and a floating interest rate thereafter, from the second year through bond maturity," Sjamsir said.

The floating rate will be the average of the interest rate on six-month time deposits of state banks plus a premium of 1.75 percent per annum, he added.

He said the bond offering would be held between July 13 and July 17, while the listing on the Surabaya Stock Exchange would be on August 8.

Pegadaian has thus far issued a total of Rp 474.6 billion since 1993.

He said the company charged its clients a 1.25 percent interest rate per 15 days, or about 30 percent per annum.

He attributed the high interest rate charge to the high administrative cost as the loans extended to clients were a small principal amount, but in bulk volume in total.

The number of Pegadaian's clients stood at 12.7 million individuals in 1999, compared to 9.6 million the previous year.

"To those clients, we channeled cumulative funds of Rp 3.2 trillion in 1999. But this will increase to Rp 3.6 trillion this year," he said.

Most of the funds channeled were to farmers and traders who needed cash for their businesses. And the tenure of the funds extended to them are usually short-term, between three months and eight months, he said.

"Currently, farmers account for 35 percent of our total clients, rural traders 20 percent, fishermen 8 percent, small manufacturers 6 percent and the remaining percentage is made up of various others," he said.

Pegadaian posted Rp 17.8 billion net profit in the first quarter this year.

The state-run company booked a net income of Rp 61 billion for 1999, compared to Rp 53 billion the previous year.

Total funds channeled amounted to Rp 3.2 trillion and Rp 3.1 trillion in 1999 and 1998, respectively. (udi)