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View all search resultsGaruda seals Rp 1t in hedging transactions with 4 banks
National flag carrier Garuda Indonesia and four private lenders, namely Bank Internasional Indonesia (BII) Maybank, Bank Mega, ANZ Indonesia and Standard Chartered Bank Indonesia, on Tuesday sealed Rp 1 trillion (US$77 million) worth of hedging transactions through a cross-currency swap mechanism
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ational flag carrier Garuda Indonesia and four private lenders, namely Bank Internasional Indonesia (BII) Maybank, Bank Mega, ANZ Indonesia and Standard Chartered Bank Indonesia, on Tuesday sealed Rp 1 trillion (US$77 million) worth of hedging transactions through a cross-currency swap mechanism.
Garuda Indonesia director Arif Wibowo said it was the second hedging partnership the national flag carrier had agreed to after it previously partnered with state-owned lender Bank Negara Indonesia (BNI).
Under the agreement, Arif said, the four banks would pay out the obligations held by Garuda Indonesia as the issuer of rupiah-denominated bonds to bondholders, effective April 5 this year. Garuda would then pay all of its obligations to the four banks in US dollars on July 5, 2018.
Arif said the hedging partnership was aimed at mitigating risks that might occur due to the fluctuation of the rupiah exchange rate against the dollar.
'A cross currency swap transaction is one of the company's quick-win strategies to rebound in 2015 in the midst of [economic and financial] challenges. This also aims to follow-up the government's appeals on hedging policies of state owned enterprises,' said Arif as quoted by Antara in Jakarta on Tuesday.
Through cross currency swap transactions, he said, the company could reduce risks of increased operational costs caused by the weakening of the rupiah exchange rate against the US dollar, because most of the company's operational costs, such as avtur [airplane fuel] purchasing, aircraft maintenance and charters, were paid in dollars.
Arif predicted that the efficiency from the second phase of the cross-currency swap transaction with a 3-year and 3-month period would amount to $16.4 million.
He said that by fixing the rupiah exchange rate against the US dollar, rupiah-denominated financing for Garuda's operational costs would be more stable and the company's activities could be more consistent.
BII president director Tazwin Zakarian, Bank Mega president director Kostaman Thayib, ANZ Indonesia president director Joseph Abraham and Standard Chartered Bank Indonesia CEO Shee Tse Koon attended the signing of agreement. (ebf)
