Seven firms to issue bonds before election: BES

Seven firms to issue bonds before election: BES

Rendi A. Witular, The Jakarta Post, Jakarta

The Surabaya Stock Exchange (BES) said that seven companies
planned to issue a total of Rp 2.7 trillion (US$321 million) in
bonds before the presidential election on July 5.

"Seven companies have signed an initial listing contract with
the bourse for bond issues before the presidential election.
Their bonds have a total value of Rp 2.7 trillion," said BES
director Guntur Pasaribu in a telephone interview on Wednesday

Guntur said the companies included PT Federal International
Finance, PT Astra Sedaya Finance, state-owned PT Perkebunan
Nusantara VII, Bank Buana, PT Ultra Jaya and PT Tunas Baru
Lampung.

He said that since the start of the year only two companies
had listed their bonds on the BES: PT Beta Inti Finance and state
Bank Rakyat Indonesia (BRI).

Companies have been enthusiastic to issue corporate bonds
since last year's high demand from both local and foreign
investors for higher yielding investment alternatives as global
interest rate fell.

As a source of financing for the corporate sector, issuing
bonds is considered a cheaper alternative because of declining
interest rates, and at a time when banks remain reluctant to
increase lending to the sector.

However, Guntur said the BES had estimated corporate bond
issues this year would reach between Rp 10 trillion and Rp 12
trillion, down from a record Rp 25 trillion last year.

This decline has been attributed to the upcoming general
election and questions over political stability.

The country's largest retailer, PT Matahari Putra Prima, plans
to launch its second five-year bond in mid-March to finance the
opening of 12 new stores.

Matahari has not decided yet on the size or the coupon of the
bond, but the amount will likely be below Rp 500 billion, an
unnamed banker told Dow Jones Newswires.

The company has named Deutsche Securities and Mandiri
Sekuritas as joint lead managers. The company is waiting for a
rating from local rating agency PT Pefindo.

Matahari issued Rp 450 billion in five-year bonds in September
2002.

Elsewhere, Guntur expects the government to list its sovereign
bonds on the Surabaya Stock Exchange to help improve the
performance of the domestic bond market.

The government plans to issue its first international bonds in
seven years on Thursday, and will list them on the Luxembourg
bourse.

Investors expect the listing of the government bonds on the
local bourse could become a yield benchmark for local companies,
he said.