PUMA launch home loan business in Indonesia

PUMA launch home loan business in Indonesia

SYDNEY (Reuters): PUMA Management Ltd, Australia's largest provider of non-bank home loans, said yesterday it would expand its operations in Asia and offer home loans in Indonesia.

Tony Gill, Managing Director of PUMA, the securitization arm of Macquarie Bank, said he believed Indonesia's economic fundamentals were good, and changes to the local financial markets, through IMF reforms, would deliver considerable benefits to local capital markets.

"Despite the last few months, we believe that Indonesia's fundamental economics are good," said Gill, speaking at Securitization Indonesia '97, an industry conference in Jakarta.

"Naturally, like most commentators, we anticipate considerable benefits from the micro-economic reform that seems likely to result from this year's shock to Indonesia's capital markets," Gill said.

PUMA, which has written more than 19,000 loans in Australia this year alone, has formed a joint venture with commercial and merchant bank PDFCI, to offer home loans to Indonesians.

The home loans would be securitized, substantially increasing the depth and liquidity of Indonesia's capital markets.

"We believe that the dynamic growth in the region will, over the medium term, be positively affected by the events of the last few months, but we will continue to monitor the situation closely," Gill said.

Gill said there were several factors in the decision to start a home loan and mortgage securitization business in Indonesia including the country's large population and growing middle class.

Indonesia's BBB sovereign debt rating also makes securitization viable, as does having key regulators such as Bank Indonesia and Bapepam, and PUMA feels there would be an easy adoption of its technology in the Indonesia market.

"Indonesia's home loan market is small at 16 trillion rupiah, but it is growing and with lower interest rates, it will recover within 12 to 18 months and will build into a sustainable, substantial market," Gill said.

Some of Indonesia's financial institutions were short of capital, which was a strategic benefit to mortgage securitizers, while domestic and offshore swap markets were developing, making bond structuring an achievable goal, Gill said.

"In Australia, we have been instrumental in the development of secondary mortgage market technology and the delivery of lower home loan rates to Australians," Gill said.

"We hope to emulate this success in Indonesia and, over time, other selected Asian countries where both economic success and social benefits will be substantial," he added.