PLN to issue Rp 1.5 trillion of rupiah-bonds by year-end

After successfully selling US$1.25 billion in global (dollar denominated) bonds, state power utility PT Perusahaan Listrik Negara (PLN) is now moving forward to sell rupiah-denominated bonds with a total value of up to Rp 1.5 trillion (about $159 million).

PLN's vice president director Rudiantara said Tuesday that the issuance of the bonds has been registered with the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK).

"We have registered this with Bapepam in the third week of October. We are looking to sell up to Rp 1.5 trillion of bonds, but still monitoring market conditions," Rudiantara said.

"We expect to offer the bonds to the market by the end of this year," he added.

PLN has appointed Danareksa and Mandiri Sekuritas as the bonds' underwriters.

Rudiantara said the funds generated from the bonds would be used for general purposes, including for PLN's capital expenditure.

PLN expects the company total production costs this year to reach Rp 160 trillion, up from Rp 140 trillion in 2008. Fuel expenditure accounts for 70 percent of PLN's total spending.

The planned issue of rupiah-bonds follows last week's success, when PLN raised $1.25 billion through its second global bond sale this year.

Rudiantara said the bonds were oversubscribed with orders reaching $4.3 billion.

Investors from Asia and America each bought 38 percent of the bonds and investors from Europe purchased the remaining 24 percent.

"Despite the current market volatility, the bonds were oversubscribed. This shows that the market trust toward the Indonesian government and PLN is still high," Rudiantara said.

He added that the money raised from the bonds would not be used for the first 10,000 MW accelerated power program as its financing has come mostly from bank loans.

The program was launched by the government in 2006 to anticipate increasing growth in power demand now reaching about 7 percent a year.

For the power plants only, the project needs $4.9 billion and Rp 19.6 trillion. Rudiantara said PLN had secured 91 percent of the dollar requirements and 97 percent for the rupiah requirement.