A

utomotive financing company PT Mandiri Tunas Finance, a subsidiary of state lender Bank Mandiri, is looking to pocket Rp 2 trillion (US$140.9 million) from a series of bond issuances to boost its cars and motorcycle financing.

The company registered the first part of the bond issuance, worth Rp 600 billion, with the Financial Services Authority (OJK) on Tuesday while the timing for the second issuance will depend on market conditions next year. PT Mandiri Sekuritas will serve as underwriters for the offering.

The Rp 600 billion offering will consist of two series of debt papers. The A series will have a maturity period of three years while the B series about five years. The debt papers will have coupon under 10 percent fixed rate. The coupon would be paid quarterly.

'€œWe aim to add capital for automotive financing through the bond issuance,'€ Mandiri Tunas Finance financial director Ade Cahyo Nugroho said on Tuesday.

The company will hold a press conference on Nov. 11 and offer the debt papers from Dec. 9 to 11. The debt papers have been rated idAA by local ratings agency PT Pemeringkat Efek Indonesia (Pefindo), meaning that the issuer has a very strong capacity to meet its long-term financial commitments relative to that of other Indonesian issuers.

The company'€™s financing rose to Rp 7.84 trillion in the second quarter, or a 9 percent increase from Rp 7.17 trillion in the same period last year. Ade said 80 percent of the company'€™s funding came from Bank Mandiri.

The financing was mostly distributed for new cars (98 percent) and the remaining 2 percent for new motorcycles and used cars this year, compared to 90 percent for new cars and 10 percent for new motorcycles and used cars last year.

The company'€™s shift to focus on new cars instead of used cars has contributed to the slight drop in its non-performing loans (NPL) to 1.10 percent in the second quarter this year from 1.12 percent last year, according to the company'€™s president director, Ignatius Susatyo Wijoyo.

The company mostly operates in Jakarta, with a third (33 percent) of its overall financing distributed to customers in the capital city, followed by East Java (15 percent) as well as North Sumatra (15 percent) and Central Java (10 percent), according to Ade.

Mandiri Tunas Finance booked a 29.14 percent increase in revenue to Rp 919.4 billion in the second quarter from Rp 711.98 billion in the same period last year and a 35.92 percent surge in net profit to Rp 154 billion.

The country'€™s third-largest company in new car financing after ACC and BCA Finance aims to channel Rp 20 trillion in financing this year.

As of the third quarter this year, it has reached Rp 12 trillion, including Rp 262 billion from the recent Gaikindo Indonesia International Auto Show (GIIAS) and Indonesia International Motor Show (IIMS). (rbk)