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T Bank CIMB Niaga (BNGA), the fifth-biggest lender in the country, plans to raise Rp 2 trillion (US$208 million) from bonds to finance its credit expansion in the biggest economy in Southeast Asia, which has witnessed steady growth on the back of strong domestic consumption.

According to an announcement made public on Monday, CIMB will issue two series of bonds, with maturities of two and five years, during the first phase of the planned overall Rp 8 trillion bond issuance.

The bank will use the funds raised from the bonds to finance its credit expansion, it said in a statement.

The first bond offer-period will run from Oct. 23 to 24. CIMB Niaga is scheduled to list the bonds on the Indonesia Stock Exchange (IDX) on Oct. 31 and has appointed PT CIMB Securities Indonesia as underwriter for the bond sale.

The bonds have obtained an AAA rating from rating agencies PT Pemeringkat Efek Indonesia (Pefindo) and Fitch Ratings.

During the first half of 2012, the publicly listed bank disbursed Rp 137.46 trillion in loans, up 17.9 percent on the previous year with a gross non-performing loans (NPL) ratio of 2.5 percent. The central bank has set NPL ratios at 5 percent.

Commercial loans made up 37 percent of the total CIMB Niaga credit portfolio, followed by corporate loans at 31 percent, consumer loans (29 percent) and sharia loans (3 percent). Sharia loans recorded the highest growth, jumping 79.7 percent to Rp 4.24 trillion in the first half, the bank reported.

Commercial lending increased to Rp 50.72 trillion during the first six months of this year, growing by 23.7 percent from the same period in 2011. The higher-end sector dominated more than half of commercial lending at Rp 26.82 trillion.

Meanwhile, the bank saw staggering growth in personal loans in its consumer loans division. Personal loans reached Rp 760 billion, surging more than eightfold from the previous year.

Between January and June 2012, CIMB Niaga booked Rp 1.98 trillion in net profits, 28.3 percent higher than last year. The bank’s capital adequacy ratio (CAR), which measures its capital strength, stood at 15.1 percent as of June 2012, higher than the central bank’s 8 percent minimum requirement.

As of June 2012, CIMB Niaga’s assets stood at Rp 179.42 trillion, with liabilities and equity of Rp 159.24 trillion and Rp 20.19 trillion respectively.

CIMB Niaga is the latest company to announce its plans to issue debt papers. Several others are also reported to be planning issuances. The bourse has said that debt papers amounting to Rp 6.6 trillion are expected to enter the capital market by the end of the year.

Security company PT Mandiri Sekuritas said on Monday that it expected to underwrite up to eight more bonds issuances before year’s end. “We are still discussing the amount of money to be raised from the bond issuances, there are continuous bonds and single-entry bonds. However, the issuances will depend on market conditions,” Dadang Suryanto, Mandiri Sekuritas’ director-head of investment bank, said.

Dadang added that all of his company’s clients raising funds from bond issuances would use June’s financial books. The securities company managed 17 bond issuances as of the end of August.

As many as 35 companies have issued 41 bonds worth Rp 44.92 trillion and $20 million so far.

Indonesia’s corporate bonds are frequently oversubscribed as they provide high yields for investors, usually several points higher than government bonds. Meanwhile, the government’s 7 percent bonds due May 2022 fell on Monday, pushing the yield up two basis points to 5.98 percent, according to the Inter Dealer Market Association as quoted by Bloomberg. (tas)