Funding potential from the issuance of Global IDR Bonds is estimated to reach IDR 200 trillion. This new instrument can reduce the funding gap especially in the infrastructure sector, which is required by companies in Indonesia.
Royke Tumilaar, Director of Wholesale Banking at Bank Mandiri Tbk (BMRI), said Global IDR Bonds is rupiah-denominated debt securities offered to domestic and international investors. The government needs infrastructure funding of IDR 5,500 trillion in the next five years or IDR 1,100 trillion per year. “Around IDR 900 trillion of the financing needs can be fulfilled by domestic financing so that there is a potential of IDR 200 trillion per year for foreign investment financing,” said Royke.
Currently, the momentum is proper for companies which are interested in issuing Global IDR Bonds because of controlled inflation, the stable rupiah exchange rate against the US dollar, and Indonesia has been rated investment from S&P. Global IDR Bonds becomes an alternative source of long-term financing required by SOEs and private companies.
Aloysius Kiik Ro, Deputy for Restructuring and Business Development at the Ministry of State-Owned Enterprises, said several countries have successfully issued debt instruments with local denominations, such as Global Peso from the Philippines, Dim Sum Bonds from China and Masala Bonds from India. “The president wants to name this instrument to Komodo Bonds,” said Aloysius.
Currently, there are four SOEs in the infrastructure sector that are preparing the issuance of Global IDR Bonds. “I cannot mention their name yet, but they have income in rupiah and require capex for long term projects,” said Aloysius.
Silvano Rumantir, President Director of Mandiri Sekuritas, said Global IDR Bonds provides access, source and diversification of funding in the capital market. For investors, this instrument provides a diversified high quality portfolio.
“For the publication of Global IDR Bonds, we will follow the existing convention in the market. It will less liquid if less than USD 150 million,” said Silvano. Mandiri Sekuritas through its subsidiary Mandiri Sekuritas Pte Ltd in Singapore is ready to become the underwriter and selling agent in the issuance of Global IDR Bonds. (*)