State-owned oil and gas giant PT Pertamina raised US$3.25 billion from the issue of U.S. dollar-denominated bonds to international investors in May this year as part of the company’s strategy to finance its acquisition plans, a top executive has said.
Pertamina investment planning and risk management director Afdal Bahaudin said on Tuesday evening the book order of the company’s global medium-term note program (GMNT) was heavily oversubscribed.
“Pertamina’s global bond deal is done with an order book of $14.4 billion, oversubscribed by 5.76 times. The offering was made on Tuesday, our time, in New York,” he said in a text message.
Afdal said the yield on the 10-year note was 4.30 percent or 80.5 basis points above the Indonesian government’s sovereign debt of equivalent term, while the 30-year was 5.625 percent or 95.5 basis points above the government’s sovereign.
Pertamina’s bonds, he said, had attracted many investors from Asia, Europe and the US.
London-based multinational banking and financial services company Barclays Capital, New York-based Citigroup and UK-based Royal Bank of Scotland are joint arrangers for the bond sale this year with PT Mandiri Sekuritas acting as the co-arranger.
Afdal, formerly Pertamina’s finance director, did not specify whether the funds acquired from the bond sales would be used to purchase stakes in overseas oil and gas blocks.
However, in an interview with The Jakarta Post on March 2 this year, Pertamina CEO Galaila Karen Agustiawan said the corporation would use the proceeds from bond issues to finance the firm’s acquisition plans.
Pertamina has been keen to boost its output by acquiring producing oil blocks overseas having signed five share-purchase agreements (SPA) with various multinational firms last year to acquire their assets.
One of the five SPAs, the firm’s deal with the New York-listed Harvest Natural Resources Inc. to buy the latter’s stake in Venezuela’s Petrodelta SA, was terminated by the Indonesian government following a disagreement over the amount of investment.
On the other hand, Pertamina signed an agreement with US-based ConocoPhillips in December to purchase the New York-listed firm’s Algerian unit, North ConocoPhillips Algeria Ltd., in a transaction reported to be worth $1.75 billion.
Pertamina expects an additional 19,900 barrels per day of oil from its acquisition projects by the end of this year.
In May last year, Pertamina raised $2.5 billion by issuing global bonds, which were divided into two tranches with terms of 10 and 30 years, which the energy company used to finance its acquisition of major oil and gas assets in Algeria.
In 2011, Pertamina raised $1.5 billion from a global bond sale in an offering conducted in New York to finance the firm’s acquisition of a stake in an Angolan oil block and other assets abroad.
This year, Pertamina assigned $6.77 billion in investment to finance upstream and downstream projects and increase production, as well as strengthening the nation’s energy infrastructure.
Pertamina’s upstream business will receive the largest allocation of $3.1 billion or around 46 percent of the total investment value.
Last year, the Jakarta-based energy firm was the most bankable state-owned company at the end of 2012 reaping record-high net profits of Rp 25.89 trillion ($2.67 billion), up 18.4 percent from a year earlier.
This year the firm is seeking Rp 29 trillion in net income.