PLN begins prepping seventh bond issue
Tony Hotland, The Jakarta Post, Jakarta
State electricity company PT Perusahaan Listrik Negara (PLN) began on Wednesday the book building process for its Rp 1.5 trillion (US$164.83 million) bond issue to refinance the company.
The unsecured bonds will have a 10-year maturity period, with indicative coupons of between 12 percent and 12.5 percent, compared to the 11.5 percent current yield offered by comparable government bonds in the secondary market.
All proceeds from the bond issue -- the seventh for PLN -- will be used to refinance the equity that had been spent to build the 850-megawatt Muara Tawar power plant in West Java.
"The construction of the plant was completed in June," said PLN deputy finance director Yusuf Hamdani.
PLN president Eddie Widiono said the new plant would help the company reduce production costs by converting more expensive fuel oil into cheaper gas.
The company said it would require Rp 29 trillion this year to buy crude oil, coal and natural gas to run its power plants, of which crude oil makes up the bulk at a cost of Rp 14 trillion.
By using natural gas, the company could save from Rp 10 trillion to Rp 14 trillion annually.
The book building for the bond issue, rated Single A by PT Kasnic Credit Rating Indonesia, will take until Oct. 21. The offering period is expected to run from Nov. 3 to Nov. 5, while the bonds will be listed on the Surabaya Stock Exchange on Nov. 11.
PLN has appointed Trimegah Securities, Danareksa Securities and Bahana Securities to arrange the issue.
The issue is expected to be well received, as it is the first time PLN is tapping into the local bond market since the 1997 financial crisis.
The company projected that the nationwide demand for electricity would increase by 6.6 percent to 175 terrawatthour (TWh) in 2013 from 90.5 TWh last year. The national output capacity of power plants is also expected to expand to 54,528 megawatts by 2013.
Earlier, PLN had planned to put off the sale until next year upon concerns over rising U.S. benchmark rates and security conditions ahead of the Sept. 20 election runoff.
However, it decided to continue with the sale this year, as the market is deemed to be more favorable than next year.
PLN's first semester financial results show the company booking Rp 29.9 trillion in revenue and Rp 1.33 trillion in operating profit. About 55 percent of the profit came from the housing and industry sectors.
No year-on-year comparison was available.