Indomobil Bonds to Offer 10.86% Coupon

PT Indomobil Finance Indonesia, a mid-scale financing company, is expected to issue bonds with the coupon at 8.41–10.86 percent with the value of Rp 500 billion (US$ 58.5 million) according to the IFT Research Department. This is based on the current yield plus risk premium of bonds offered by PT Verena Multi Finance Tbk (VRNA), because they they have the same ratings.

According to the IFT Research Department, the “A” series bonds with 370-day term may use FR17 as benchmark. The state bonds with FR17 series currently have a yield of 5.66 percent. Verena previously offered the “A” series bonds with the premium of 175-325 basis points. Based on the same benchmark and yield, Indomobil bonds will set the coupon at 8.41 percent to 8.91 percent.

The “B” series bonds with a two-year term, will use the FR33 as benchmark with a yield of 6.19 percent. Verena offered the premium range value of 275-350 basis points. Hence the Indomobil’ “B” series bonds will have the coupon of 8.94-9.69 percent.

The “C” series bonds of Indomobil are estimated to have a 9.32-10.32 percent yield if based on FR51 which has 6.57 percent plus an assumed premium value of 275-375 basis points offered by Verena.

The “D” series with a four-year term, will set the coupon in the range of 9.61-10.86 percent based on the assumption that the company will give premium value of 275-400 basis points. Indomobil bonds will use FR27 as its benchmark with a 6.86 percent yield.

If the estimate is correct, the coupon offered by Indomobil is lower than that of Verena’s. Verena offered 8.82 -9.61 percent yield for its “A” series bonds and 10.27-11.02 percent yield for the “B” series. The “C” series bonds is offered with 10.62-11.62 percent.

Gunawan, Director of Indomobil Finance did not comment on the yield range. Gunawan only said that the bonds will be used to increase the company's target loan portfolio by 46 percent to Rp 3.5 trillion from Rp 2.4 trillion in 2010.

Other than issuing bonds, Indomobil will also obtain a bank loan to support its financing distribution. According to Gunawan, he approached several banks to support the company’s financing. “We will also rely on our internal funds,” he said.

Indomobil appointed PT Kresna Graha Sekurindo Tbk, PT Indo Premier Securities, PT CIMB Securities Indonesia and PT Nikko Securities Indonesia as underwriters for its bonds issuance.