F

inancing company PT BII Finance Center will issue bonds worth Rp 500 billion (US$54m) later this month to strengthen its consumer financing.

The bonds will comprise four categories carrying interest rates of between 6 percent to 8 percent and with maturities of between 370 days and four years, company president director Alexander Tan said.

He said that the bonds would be offered from May to June 1.

Series A bonds, with a maturity of 370 days, carry an interest rate of between 6 percent and 6.5 percent per annum.

Series B has a maturity of two years and carries an interest rate of between 6 percent and 6.6 percent.

Series C has a maturity of three years, carrying an interest rate of between 7.25 percent and 7.9 percent, and series D has a maturity of four years and carries an interest rate of 7.25 to 8 percent.

Alexander said BII Finance, which is 99.99 percent owned by PT Bank International Indonesia (BII), will use the money raised from the bond issuance to boost its consumer financing.

“Actually we’re not short in cash. Funding from BII alone will be sufficient for our consumer financing. However, we issue bonds to diversify our sources of funding as we are looking in the long term,” he told reporters on Thursday.

Most of BII Finance’s funding comes from the parent company under a joint financing plan with OCBC NISP and Bank Mandiri, according to the company’s statement.

Last November, BII Finance entered the debt market for the first time when it issued medium-term notes worth Rp 300 billion.

Alexander said that he was upbeat that the bonds would see a positive response from investors as ratings agency Fitch Ratings had assigned the bonds an AA+ rating.

The credit rating indicates a stable outlook, which he attributed to the company’s proven track record and strong cash flow. Last year, the company saw a significant growth in its net profit, jumping 108 percent to Rp 71.92 billion, from Rp 34.5 billion recorded a year earlier.

BII Finance’s revenue also increased to Rp 362.44 billion in 2011, a 97.28 percent surge from the Rp 183.72 recorded in 2010.

Meanwhile its assets stood at Rp 1.11 trillion last year, more than doubling 2010’s Rp 456.72 billion.

This year, the company, which primarily provides financing for purchases of new cars, is targeting Rp 6.6 trillion in credit, a 40.43 percent increase from the Rp 4.7 trillion reported in 2010.

Alexander said that he was optimistic that the company could meet this year’s target, despite new down-payment rules requiring car borrowers to pay a deposit of between 20 percent and 30 percent for their car purchases.

 “Most of our customers have already been paying down payments of 30 percent anyway, since we target higher-end market,” he said.

He also said that the company has reached 25 percent of its credit target by the end of April. (han)