Construction & infrastructure issuers: SOEs formulate various strategies to pay off bonds
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Emiten konstruksi & infrastruktur: Seribu jurus BUMN lunasi obligasi
17 March 2023
By: Nuhansa Mikrefin
Several issuers in the construction and infrastructure sector that are affiliated with the government are devising strategies to pay off bonds due in 2023. Refinancing with new bonds, bank loans, and internal cash are the options considered.
Those strategies are studied by several state-owned enterprise (SOE) issuers, namely PT Jasa Marga (Persero) Tbk (JSMR), PT PP (Persero) Tbk (PTPP), and PT PP Properti Tbk (PPRO).
JSMR has a debt of PT Jasa Marga Continuing Bonds II Year 2020 worth Rp1.1 trillion that will be due on 8 September 2023. The bonds have a coupon rate of 7.90% per year.
Jasa Marga Corporate Communication and Community Development Group Head Lisye Octaviana said that the company will pay off the debt by getting bank loans. Besides that, the debt will also be paid off using JSMR’s internal cash.
“The debt due in 2023 will be paid off with the company’s internal cash and banking facilities,” she said to Bisnis on Tuesday (14/3).
She said that JSMR will control the debt by refinancing. Besides that, another initiative taken by JSMR is to control toll road construction activities by ensuring suitable investment loans.
A different strategy is prepared by PTPP. From March to April 2023, PTPP will offer PTPP Continuing Bonds III Phase III Year 2023 worth Rp955.5 billion. The bonds are part of PTPP Continuing Public Offering III that targets to raise Rp3 trillion.
Based on the prospectus, the bonds offered by PTPP have a fixed interest rate of 8.8% with a maturity period of 3 years from the issuance date.
Funds from the bond issuance is planned to be used by PTPP to refinance the due bonds, which is PTPP Continuing Bonds II Phase I Year 2018 Series B worth Rp460 billion that will be due on 6 July 2023.
If the public offering does not reach Rp460 billion, PTPP will pay off the debt with their internal cash. On the other hand, if the public offering surpasses Rp460 billion, the remaining funds will be used by PTPP as working capital.
“The working capital mentioned in the bond issuance fund utilisation plan will be used to fund construction activities, which include worker salaries and [payments for] material suppliers and subcontractor vendors,” PTPP’s management said in the prospectus quoted on Thursday (16/3).
PTPP’s subsidiary is also walking on the same path. PT PP Properti Tbk (PPRO) is planning to issue new bonds to refinance their debt that reaches Rp142.5 billion. PPRO has a debt of PP Properti Bonds Phase I Year 2018 Series B worth Rp142.5 billion that will be due on 6 July 2023. The bonds have an interest rate of 9.25% per year.
PP Properti Corporate Secretary VP Ikhwan Putra said that the company will conduct a refinancing by issuing new bonds to pay off the due debt. PPRO is currently in the process of issuing the bonds that are predicted to be issued in May 2023.
“The company will conduct a refinancing by issuing bonds,” Ikhwan said to Bisnis on Tuesday (14/3).
Furthermore, he said that PPRO is currently preparing to divest its subsidiary. Funds from the divestment is expected to help PPRO in reducing the debt with interest.
However, he does not want to disclose which company will be divested to a strategic investor.
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