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ajor property developer PT Bumi Serpong Damai (BSD), through wholly owned subsidiary Global Prime Capital Pte. Ltd., will issue global bonds amounting to US$225 million.

BSD and some of its subsidiaries will be the guarantees of the offering.

Rating agencies have given the bond a Ba3/BB- rating, which is considered speculative in nature.

According to its recently published prospectus, BDS plans to issue the dollar-denominated bonds with coupon sets at 6.75 percent per annum.

Citi and UBS have been appointed to manage the bonds. The five-year bonds are due in April 2017.

The property company will use the funds to finance land acquisition and project development.

Fitch Ratings has assigned the senior unsecured notes a final rating of BB-, which was made on the back of, among others, the company'€™s low leverage and cash reserves that exceeded its debt in 2008-2013.

Fitch also said that BSD'€™s earnings before interest, taxes, depreciation and amortization (EBITDA) by end of 2014 showed a margin of 50 percent, which is strong compared to its regional and domestic peers.

Although the EBITDA margin is likely to decline due to a lower proportion of landed property in its sales mix, Fitch expects the company to maintain an EBITDA margin of more than 40 percent over the medium term.

Geographic concentration, however, has become the rating agency'€™s main concern.

'€œFitch doesn'€™t expect a rating upgrade over the medium term because of the concentration of BSD'€™s cash flows in the Tangerang region in the Greater Jakarta area, primarily through its sales in BSD City, as well as the company'€™s smaller development scale compared to regional peers,'€ the report further read.

'€œThis limits the company'€™s ability to discount its inventory to speed up sales and increase liquidity in a downturn, as it could impair the future profitability of a large part of its development book. However, this risk is mitigated by the products within BSD City that target different price points and both the residential and commercial segment.'€

BSD, part of Sinar Mas Land, had previously raised Rp 1.65 trillion from releasing new shares in a private placement late last month, the equity issuance of which was absorbed by its Singapore-listed parent company.

The equity offering comprised 874.85 million new shares, equal to 5 percent of the company'€™s enlarged capital.

As previously reported, the company is looking to spend up to Rp 7 trillion in investment in four new projects expected to enter the market this year. Most of the planned spending, director and corporate secretary Hermawan Wijaya said, would be from the company'€™s marketing sales proceeds last year, while the remainder may come from external sources, possibly bank loans.

The projects are, a mixed-use Aerium development at Taman Permata Buana in West Jakarta worth Rp 2 trillion in investment; the Elemen Rasuna apartments worth Rp 2 trillion; a mixed-use building worth Rp 3 trillion in Tanjung Barat, South Jakarta; as well as residential project Grand City Samarinda in East Kalimantan.

The four new projects are expected to help the company meet its marketing sales target of Rp 7.5 trillion, up by around 15 percent from the Rp 6.5 trillion recorded in 2014.

The company has secured Rp 1.8 trillion in marketing sales in the first quarter, about a 27 percent increase compared with the same period last year. (aml)