S. Korea set to agree to RI debt delay
S. Korea set to agree to RI debt delay
SEOUL (Dow Jones): South Korean creditors are expected to
extend maturities on their loans to Indonesian financial
institutions and companies as part of the Southeast Asian
nation's US$80 billion debt restructuring plan, local bank
officials said yesterday.
Attending a presentation by visiting Indonesian officials
promoting the restructuring plan, South Korean bankers said they
have no choice but to abide by the debt arrangement.
"To collect our loans, (Korean creditors) have no option but
to agree to their restructuring program," said a representative
from Korea Long-Term Credit Bank as he was leaving the meeting.
On the fifth stop of their global debt restructuring roadshow,
around 10 Indonesian officials met with 200 representatives of 70
South Korean financial institutions.
On June 4, Indonesia and a steering committee of international
creditors agreed to restructure $80 billion in foreign private
debt to alleviate pressure on the country's troubled companies
and shaky foreign exchange markets.
The June agreement is voluntary for both Indonesian debtors
and their foreign creditors. As a result, Indonesian officials
and debt committee members are selling the deal in six major
cities worldwide.
South Korea's total debt exposure to the Southeast Asian
country is estimated at $4.5 billion, of which $1 billion was
extended by Korea's financial institutions, Finance and Economy
Ministry officials said.
The Korea Long-Term Credit Bank official said local bankers
asked technical questions about the restructuring program offered
by Indonesia and added that his bank has little exposure to
Indonesia.
Indeed, Rah Hong Bin, senior deputy general manager of the
international credit department of state-run Korea Development
Bank said Korean financial institutions are expected to react
positively to Indonesia's debt program.
"Local financial institutions are waiting and see now, but the
debt talks will be smooth in order to avoid worsening bilateral
trade between the two countries," Rah said, adding that South
Korea imports much natural gas, pulp and wood from Indonesia.
Meanwhile, Indonesian officials were also somewhat upbeat
after the two-hour meeting.
"It was satisfactory," said Boediono, state minister for
development planning after the session with local bankers in
downtown Seoul. He added that there will be further discussion
between Indonesian officials and Korean creditors about details
on the debt restructuring arrangement.
Boediono said the session was dominated by explanations of the
restructuring program by Indonesian officials.
Dono Iskandar Djojosubroto, a managing director of Bank
Indonesia, said his officials and South Korean banks also
discussed how loans can be returned.
"If we don't cooperate or Indonesia collapses, they (Koreans)
will lose their money," Djojosubroto said leaving the meeting.