Bukopin offers 10.25 percent return

Mid-sized lender PT Bank Bukopin Tbk (BBKP) is offering 9.25 to 10.25 percent coupons for its seven-year bonds, in a bid to raise Rp 1 trillion (US$113 million) to expand lending.

There is potential to up-size the proceeds if the sale is oversubscribed, but that will depend on investor appetite because the publicly-listed bank has secured approval from capital market regulator Bapepam-LK to issue bonds worth up to Rp 2 trillion in stages within the next two years, an executive said.

Book building for Bukopin bonds began Wednesday and will end Feb. 21. The two-day offering period starts March 5, and allotment will take place on March 7, according to a prospectus distributed to analysts and investors during a due diligence meeting on Wednesday.

The bonds are rated A by local ratings agency PT Pemeringkat Efek Indonesia (Pefindo).

“The investors will likely be dominated by domestic institutional investors: insurance [companies], pension funds, other banks and [state-owned insurance firm] Jamsostek,” said Yuga Nugraha, a director of PT CIMB Securities Indonesia, which underwrote the debt paper issuance with PT Mandiri Sekuritas and PT Indo Premier Securities.

“Domestic demand is still high for this instrument,” he said, adding that foreign investors were also open to bid for the bonds.

Indonesia’s new investment status from Fitch Ratings and Moody’s Investors Service, coupled with a new Bapepam-LK regulation allowing firms to issue bonds in stages using only one license, have boosted companies’ appetite in selling bonds to fund expansion.

“We will use the proceeds for business expansion, especially in credit,” said Glen Glenardi, Bukopin’s president director who oversaw loan growth of about 20 percent this year, slowing from last year’s predicted 31 percent growth with about Rp 38 trillion loans outstanding.

The lender’s loans portfolio, controlled by state logistics firm Bulog’s labor groups, is dominated by micro, small and medium enterprises (MSMEs) that make up 58 percent of all loans, with 30 percent channeled to the commercial sector.

Bukopin expected to lift its capital adequacy ratio (CAR) to between 15 and 16 percent, from about 13 percent at the end of 2011 following the bond sales, which would be enough to meet its credit expansion plans through to 2013, finance director Tri Joko Pihanto said. The central bank requires banks to have at least 8 percent CAR.

Audited 2011 financial results will be published this month.

As of the third quarter last year, Bukopin, which had Rp 51.8 trillion assets, booked a 36.3 percent increase in net profits to Rp 458 billion.

Lending grew 31.3 percent to Rp 35.9 trillion over the same period. Gross non-performing loans (NPL) were at 3.4 percent as per September last year, lower than banking regulator BI’s 5 percent requirement. Bukopin held Rp 43.5 trillion in third-party funds, up 18 percent from the previous year, translating to a 82.6 percent loan-to-deposit ratio (LDR).

Bukopin’s shares rose 1.61 percent on Wednesday to close at Rp 630 each. The shares have risen 8.6 percent so far this year, outperforming the broader Jakarta Composite Index’s (JCI) 4.3 percent gain.