Rupiah-Denominated Global Bonds: Wijaya Karya Prepares Komodo Bonds
Construction company Wijaya Karya (Wika) is conducting a roadshow for its rupiah-denominated global bonds (to be listed on the London Stock Exchange). Wika is following the example of state-controlled toll road operator Jasa Marga that listed its rupiah-denominated global bonds (also known as "komodo bonds") in London on 13 December 2017.
Laksono Widodo, Director at securities company Mandiri Sekuritas, said Wijaya Karya (Wika) started it roadshow (which is organized in several countries including Great Britain, the United States, and several Asian nations) on Tuesday (16/01). The roadshow will be concluded on Friday (19/01). Provided investors show good interest in the komodo bonds, then Wijaya Karya (Wika) will go-ahead with the listing in London.
Bintang Perbowo, President Director of Wika, had stated earlier that the company seeks to issue USD $400 million worth of bonds as an alternative source for funds (besides internal cash reserves and the listing of the company's subsidiaries on the Indonesia Stock Exchange) required for the company's business expansion.
Moody's Investors Service gave a Ba2 rating to Wijaya Karya's komodo bonds, meaning it is a "non-investment grade" rating and therefore "speculative". Although Wika is a strong company, a rupiah-denominated bond is vulnerable to rupiah weakness.
Maisam Husnain, analyst at Moody's Investors Service, said Wika wants to use the komodo bond to improve the company's liquidity. About IDR 1.75 trillion (approx. USD $13 million) will be used to settle short-term debt obligations. The remainder is bound to be used as pre-funding for various investment projects, including toll roads, a transit oriented development (TOD), and the Jakarta-Bandung high speed railway.
Read more: Indonesian Construction Companies in Focus: Wijaya Karya
Wika reported a 47 percent (y/y) increase in net profit to IDR 682.6 billion (approx. USD $51 million) up to the third quarter of 2017, hence being the third-biggest state-controlled company in terms of highest net profit so far in 2017 (after Waskita Karya and Pembangunan Perumahan). Wika's net sales reached IDR 15.88 trillion (approx. USD $1.2 billion) per Q3-2017, up 70 percent (y/y) from the same period one year earlier.
Read more: After Jasa Marga's Success, PLN Plans to Issue Global Rupiah Bonds
On Tuesday's trading day, shares of Wika (listed on the Indonesia Stock Exchange) had surged 3.84 percent to IDR 1,895 a piece by 11:50 am local Jakarta time. So far this year, shares of the company have surged more than 22 percent.
Stock Quote Wijaya Karya - WIKA: