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ederal International Finance Group (FIF Group), the motorcycle financing unit of diversified conglomerate Astra International Indonesia, planned to issue a continuous bond amounting to Rp 10 trillion (US$809.4 million) next year, the company'€™s executive said recently.

FIF Group head of treasury and funding Jerry Fandy said last week that his company planned to issue the first phase of the bond in the first quarter of next year.

The continuous bond (PUB II), he said, would be higher than the company'€™s last continuous bond of Rp 8 trillion, which secured its permit back in 2012.

The amount of funds expected to be raised from the first phase of the 2015 bond will be around Rp 3 to 4 trillion, according to Jerry,

'€œHowever, we will need to consider market conditions. If the bond cost is expensive, the market might only be able to absorb Rp 2 trillion and Rp 2.5 trillion,'€ he told reporters, adding that the bond will mature two years after it is issued.

The bond issuance and ratings will be based on the company'€™s 2013 full-year financial report. The proceeds from the bond will be used to fund the company'€™s automotive financing.

The company has issued Rp 19.25 trillion in bonds since its operations commenced in 1989. Out of the total bonds, about 75 percent of the figure has already been settled.

'€œOur company sources 30 percent of funds needed for financing through bonds, while another 30 percent comes from joint financing. The rest is from bank loans, be it from local or foreign lenders,'€ he explained.

FIF Group plans to channel Rp 26 trillion in loans this year, up by around 21 percent from the
Rp 21.5 trillion channeled this year. The rise is expected to be motorized by all the company'€™s financing sectors.

As of the third quarter of 2014, FIF Group saw a 23 percent increase in its channeled loans, up from
Rp 15.9 trillion last year to Rp 19.6 trillion in the same period this year.

'€œThe increase is especially supported by rising demand for Honda this year,'€ Jerry explained.

Motorcycle sales were up 3.69 percent on an annual basis to 6.73 million in the period between January and October. Meanwhile Astra'€™s Honda sales '€” the products of which are FIF Group'€™s main financing target '€” grew far above industrial sales to 8.14 percent to 4.25 million.

The company has also channeled Rp 3.6 trillion for used-motorcycle financing and Rp 422.5 billion of four-wheeled financing in the first nine months of the year. It also recorded Rp 2.2 trillion non-automotive financing.

As for next year, Jerry said the company had not estimated the amount of loans to be channeled. He said the recent fuel-price hikes may affect motorcycle sales.

'€œThere will be a business hiccup early next year as a result of the fuel-price hikes as our growth relies on market growth. But we hope that situation returns to normal soon after,'€ he went on.

FIF Group is the country'€™s largest motorcycle financing company, dominating 46.2 percent of the country'€™s market. Its assets currently stand at Rp 29.5 trillion.

The company recorded Rp 5.5 trillion in revenue in 2013, only slightly up compared with Rp 5.4 trillion registered in the preceding year. Its profits for the period last year amounted to Rp 1.2 trillion, a rise of 9 percent year-on-year.