RI starts marketing debt exchange program

RI starts marketing debt exchange program

NEW YORK (Dow Jones): Indonesia will begin marketing to
foreign banks a program to exchange between US$8 billion and $10
billion in debt contracted by the country's banks into new loans
in early July, a source familiar with the plan said Thursday.

The program, part of a wide-ranging agreement etched through a
series of meetings in New York, Tokyo and Frankfurt earlier this
year, aims at lightening the weight of foreign debt crushing
Indonesia and Indonesian private companies.

Under the plan, the creditors of Indonesian banks will have
the option of rolling over existing credits into new loans with
maturities of one, two, three and four years baring respective
yields of 2.75 percent, 3 percent, 3.25 percent and 3.5 percent.

The new loans will be guaranteed by the country's central
bank, Bank Indonesia.

The roadshow to market this exchange offer to foreign banks
will visit several cities, including Paris, New York, London,
Tokyo and Frankfurt, the source said.

In addition to the exchange program for the bank debt,
Indonesia's debt restructuring deal, reached in Frankfurt in
early June, also include a plan to maintain existing trade
financing arrangements.

According to the source, a prospectus to formally launch the
trade finance program was sent to Indonesia's creditors Thursday.
That program covers between $4.2 billion and $4.4 billion in
debt.

Before launching both the bank debt exchange program and the
rollover of trade finance plan, Indonesia needs to pay up to $1
billion in arrears due on the debt.

According to the source, payment of arrears to foreign banks
have already begun. Foreign banks involved in the restructuring
of Indonesian debt weren't immediately available to comment on
whether they have began receiving payments.