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Banks eye more syndicated loans next year for infrastructure
Major lenders expect positive demand for syndicated loans from the infrastructure sector next year as President Joko âJokowiâ Widodo envisions more project development to boost Indonesiaâs economy
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ajor lenders expect positive demand for syndicated loans from the infrastructure sector next year as President Joko 'Jokowi' Widodo envisions more project development to boost Indonesia's economy.
Alexandra Wiyoso, senior vice president of syndication, oil and gas at Bank Mandiri, said the state-owned lender was convinced that President Jokowi's programs on infrastructure would prompt demand.
Syndicated loans would be an alternative to finance infrastructure projects, which often need huge amounts of loans, she added.
'I think the government's efforts to boost infrastructure will drive Bank Mandiri's syndicated loans next year. Let alone, we still have undisbursed syndicated loans that can be realized next year,' she said.
By the end of this year, Bank Mandiri expects to reach its target of securing Rp 10 trillion (US$822.7 million) in syndicated loans with a major portion going to the infrastructure sector, even though it was lower than in previous years due to weak economic growth.
'Next year, we hope the amount will be higher than this year because there are several deals that will be made. We are still preparing several pipelines before the year's end, but I cannot disclose them now,' Alexandra said.
Bank Mandiri has previously contributed a pipeline of Rp 50 trillion in support of the Master Plan for the Acceleration and Expansion of Indonesian Economic Development (MP3EI), a mammoth infrastructure program designed under the administration of former president Susilo Bambang Yudhoyono.
The bank has disbursed a number of its loans to several construction projects under the MP3EI program, namely Bali's Mandara Toll Road and the Ngurah Rai International Airport expansion as well as Jakarta's Kalibaru Port, also known as New Tanjung Priok Port.
According to Bloomberg's Global Syndicated Loans League Tables, as many as 20 international banks and financial institutions acted as Indonesia's mandated arrangers as of September 2014 for 42 syndicated-loan deals with a total volume of $14.56 billion, increased by 30.23 percent from $11.18 billion last year.
Japanese giant Sumitomo Mitsui Financial Group Inc. was placed in the top ranking on the table with a total deal worth $980 million, while state-owned lender PT Bank Negara Indonesia (BNI) took 20th place with $234 million.
Ranked 10th on the Bloomberg table, Deutsche Bank AG is also assessing at least four infrastructure projects to be financed by syndicated loans next year, the bank's country chief officer Kunardy Lie said recently.
Kunardy said the bank had always been calculating its pipelines for syndicated loans based on amount and balance sheets' efficiency rather than setting a certain limit.
'We will support the government's programs for infrastructure developments and we will look at the projects case-by-case,' he said.
This year, Deutsche Bank has been involved in a $250-million syndicated loan with Standard Chartered Bank and the International Finance Corporation for state-owned financing firm PT Indonesia Infrastructure Finance (IIF) as well as $1 billion for state-owned port operator PT Pelabuhan Indonesia II (Pelindo) with a consortium comprising six other foreign banks.
The government announced on Friday that it would need to invest Rp 699 trillion for its sea-transportation program between 2015 and 2019 in support of the president's maritime-axis doctrine.
Under the initiative, National Development Planning Board (Bappenas) deputy chief for infrastructure Dedy S. Priatna said the government had set a target of reducing the country's logistics costs from the current 23.5 percent of gross domestic product (GDP) to 19.2 percent in 2019.
