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tate lenders Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) are looking to generate trillions of rupiah each from outside their customer funding pools in the second half as they aim to explore funding opportunities and match lending maturity periods.

BRI finance director Haru Koesmahargyo said that the bank was looking to issue negotiable certificates of deposit (NCD) worth at least Rp 2 trillion (US$148.72 million) before year-end.

It will be BRI'€™s second NCD issuance in 2015, following a first issuance worth Rp 1.88 trillion in April. '€œWe will issue the next NCD in three tranches, with maturity periods including three months, six months and nine months,'€ he said.

NCD issuance will be a regular activity as it seeks to establish a name in the NCD market, according to Haru. NCD are guaranteed by the issuing bank and can be sold in the secondary market but, unlike bonds, cannot be cashed in before maturity.

'€œThe upcoming NCD will actually be used to replace maturing ones, but we want to do this regularly in the coming years, so that we can maximize funding options other than our DPK [third-party funds],'€ he said.

'€œThis is also necessary because we have long-term lending projects that must be financed using long-term funds,'€ he said.

BRI has stated in its 2015 banking business plan (RBB) that it is seeking around Rp 6.88 trillion in funds from securities issuance and US$700 million from offshore loans.
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'€œWe want to do this regularly in the coming years, so that we can maximize funding options other than our DPK [third-party funds].'€

While the securities issuance includes bonds and NCD, the offshore loans will be made up of a
planned $500 million club deal with 11 banks and $200 million borrowed from the Export-Import Bank of
the US.

Haru said that BRI was still waiting for approval from Bank Indonesia (BI) regarding the club deal because such a facility would be considered as external debt that would require the central bank'€™s green light.

'€œThe one from the US is still being processed by the export-import credit agency,'€ he added.

Besides from the club deal and the Export-Import Bank of the United States, BRI is eyeing $1 billion-worth of funds from the China Development Bank (CDB) as well and talks to finalize the agreement are ongoing.

Meanwhile, BNI is hoping to raise funds from NCD issuance and other similar securities as well, according to BNI finance director Rico Rizal Budidarmo.

'€œWe have stated in our 2015 RBB that we may look for between $300 million and $500 million in funds beyond our DPK to finance business needs, but the figure may change, in line with the latest developments of government infrastructure projects that we are involved in,'€ he said recently.

By the end of the first quarter, BNI'€™s outstanding loans channeled to infrastructure-related projects amounted to Rp 48.47 trillion. Most of them were recorded in power plant projects, followed by toll-road and construction works.

Rico emphasized the need to source other funds from outside its customers'€™ deposits because of the projects'€™ long-term maturity periods. '€œWe cannot rely solely on our savings, current accounts and time deposits,'€ he said.

The lender expects to be able to issue its NCD before year-end, but at the same time it is also exploring bilateral deal opportunities as they might offer lower costs than the securities.

Similar to BRI, BNI is finalizing talks with the CDB, as well, to obtain $1 billion-worth of funds.