Bank Mandiri to Issue USD $250 Million of Global Rupiah Bonds
State-controlled, yet listed, financial institution Bank Mandiri plans to issue global bonds with a nominal value of approximately USD $250 million or IDR 3.33 trillion (exchange rate of USD $1 = IDR 13,321) before the end of 2017. Kartika Wirjoatmodjo, President Director of Bank Mandiri, said the company chose global rupiah-denominated bonds because it considers the supply of bonds in the domestic market currently too high. In fact, the supply outpaces existing demand.
At the Indonesia Infrastructure Finance Forum event on Tuesday (25/07) Wirjoatmodjo said Bank Mandiri wants to tap a new market and increase the number of international investors. Indonesia actually regularly issues global government bonds (and there exists plenty of demand for these state bonds). However, global corporate bonds are still something new to Indonesia and therefore there exists some uncertainty about the level of demand.
Bank Mandiri cannot yet give an indication of expected potential demand from foreign investors. It will therefore first organize roadshows in order to market the bonds and see investors' appetite.
With the government's ambitious infrastructure development push, many financial sources are required for its funding. To accommodate this, Bank Mandiri sees global rupiah-denominated bonds as one solution.
Bank Mandiri would particularly like to attract interest from pension funds in Europe by selling bonds with yields in the range of 6-7 percent.
Bank Mandiri, for 60 percent owned by the central government, is Indonesia's largest financial institution in terms of assets. It reported a 33.7 percent year-on-year (y/y) increase in net income to IDR 9.5 trillion (approx. USD $714 million) in the first half of 2017.
Meanwhile, Bank Mandiri's net interest income (the difference between the revenue that is generated from the bank's assets and the expenses associated with paying out its liabilities) expanded by 6 percent (y/y) to IDR 25.7 trillion in the first half of 2017, while its non-interest income (income from fees, commissions and foreign exchange gains) grew by 18.5 percent (y/y) to IDR 10.8 trillion.
This good performance came on the back of robust loan growth, a surge in Bank Mandiri's fee-based income and a decline in its non-performing loan (NPL) ratio during the January-June 2017 period.
On Tuesday (25/07) the company's shares listed on the Indonesia Stock Exchange rose 0.56 percent to IDR 13.350 a piece. So far this year its shares have risen 15.33 percent.
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