Bond sales by Indonesian companies may reach more than Rp 50 trillion ($5.2 billion) this year as they benefit from low borrowing costs in the country.
Salyadi, a director of Indonesian ratings agency Pemeringkat Efek Indonesia (Pefindo), said the interest by Indonesian firms in selling notes would persist through the end of the year.
“The appetite remains strong, especially from financing companies as they want to boost their financing business. Bonds are the cheapest source of funds,” Salyadi said.
He said the ratings agency was expected to assess several bond sales valued at Rp 5 trillion in total, though he did not provide information on when those sales might take place.
Corporate bond sales in Indonesia reached Rp 42.4 trillion from January to August 8 this year. That consisted of Rp 40.9 trillion in conventional corporate bond sales and Rp 1.5 trillion in rupiah-denominated Islamic bonds known as sukuk.
This year’s target would exceed the actual bond sales by Indonesian companies last year, when Bank Indonesia’s benchmark interest rate stood at 6 percent.
Data from the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) showed that 37 companies issued rupiah-denominated bonds at a combined value of Rp 45.74 trillion in 2011.
The central bank, Bank Indonesia, which last cut it benchmark rate by 25 basis points in February this year, has kept the policy rate at 5.75 percent over the last six months to spur economic growth.
Low borrowing costs mean that Indonesian companies are able to sell the notes at a cheaper price.
Indonesian corporate bonds will typically be priced against government bonds, with their prices set higher than the government bonds.
The yield on the government five-year bond was 5.6832 percent on Tuesday, up from 5.6753 percent the previous day, while the 10-year bond was priced to yield at 6.1161 percent on Tuesday, from 6.0813 percent the previous day, according to data from the Indonesia Bond Pricing Agency.
Several Indonesian companies including Mandala Multifinance, Bank Tabungan Pensiunan Nasional and Bank CIMB Niaga have reported plans to sell notes later this year.
No details have been made available on the size or tenor of the prospective bond sales by those companies.