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inancing company PT BII Finance Center announced on Thursday the issuance of debt papers, hoping to raise Rp 500 billion (US$36.04 million) in funds for business expansion.

The bond issuance, which is the first part of the company'€™s bonds issuance plan worth Rp 5 trillion over two years, will offer two types of debt papers, with maturity periods of three and five years respectively.

The three-year debt papers will have 9.65 percent to 10.35 percent coupon rates while the five-year maturity will offer 10.35 percent to 11.05 percent coupons. PT Maybank Kim Eng Securities, PT Indo Premier Securities and PT HSBC Securities Indonesia will serve as underwriters for the offering.

BII Finance Center president director Alexander Tan told a press briefing in Central Jakarta on Thursday the company wished to expand its automotive financing business as sales of new cars remained big despite the sluggish economy.

'€œThe opportunity is wide open,'€ he said.

The debt papers, which are rated AA+ (idn) by ratings agency PT Fitch Ratings Indonesia, entered their book-building period on Thursday and will be offered on Nov. 6 to 9, according to the company'€™s statement.

BII Finance Center, a subsidiary of private lender Bank Maybank Indonesia '€” previously Bank Internasional Indonesia (BII) '€” has developed financing for new cars and capital goods, such as heavy equipment, industry and oil drilling machines, as its core business.

The firm saw its revenues increase 20.35 percent year-on-year (yoy) during the first half of this year to Rp 419.94 billion from the Rp 348.94 billion booked last year. Its net profits rose by 23.38 percent yoy during the same period to Rp 142.83 billion from Rp 115.86 billion last year, while outstanding financing so far stood at Rp 4.06 trillion. The non-performing loan (NPL) ratio was booked at 0.33 percent.

Alexander said the company was optimistic about the automotive market, saying it targeted to disburse Rp 9.8 trillion in funds for more than 60,000 units of vehicles next year.

Data from the Association of Indonesian Automotive Manufacturers (Gaikindo) showed that car wholesales in the country hit 671,641 units during the January-August period, the lowest level in four years, with car sales and production declining 19 percent and around 15 percent year-on-year, respectively.

Since 2012, annual car sales have normally hit more than 1 million units. 1.23 million units were recorded in 2013, the highest level over the last few years.

Sales, however, seem to have started to pick up. August sales stood at 90,534 units, a 62.8 percent jump month-to-month from July'€™s 55,615 units. The association'€™s secretary-general, Noegardjito, expressed optimism than September'€™s sales would exceed 90,000 units.

Meanwhile, Indo Premier Securities investment banking head Rayendra Tobing said that several companies still preferred bonds issuance as opposed to rights issue as a way to raise funds despite concerns that the debt papers would not be absorbed by the bearish market.

'€œThis is because rights issue has a risk of share dilution for shareholders who do not wish to place more capital into the companies,'€ he said.

Recently, another automotive financing company, PT Mandiri Tunas Finance, also issued Rp 600 billion in bonds to boost its car and motorcycle financing operation. (prm)