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ajor telecommunication company XL Axiata claims that the first stage of its Rp 5 trillion (US$3.6 billion) Islamic bond (sukuk) offering '€” said to be the biggest in the country to date '€” is a huge success, saying that the bonds have been oversubscribed.

XL is offering Rp 1.5 trillion in bonds as part of the continuous sukuk, and its finance director, Mohamed Adlan bin Ahmad Tajudin, has said the bonds have been oversubscribed by about 1.5 times, or equal to Rp 2.25 trillion.

'€œMost of the buyers are local investors from various backgrounds, such as insurance, pension funds and banks,'€ he told reporters on Tuesday.

'€œThe bonds have been well-received. We tested the market with the first stages and they have actually been oversubscribed. It is the biggest sukuk offering in Indonesia and we attracted a lot of investors.'€

The company has concluded the bookbuilding period for the bonds, held between Oct. 29 and Nov. 12. The offering period is set for Nov. 25 and 27, and allotment of the bonds will be on Nov. 30. The bonds are scheduled for listing on Dec. 3.

The company issued the Rp 1.5 trillion in four series with coupons ranging from 8.75 to 11 percent.

Series A of the bonds amount to Rp 494 billion, and will mature in 370 days with a coupon set at 8.75 percent. Series B, meanwhile, has a coupon set at 10.25 percent with maturity due in three years.
The second series is worth Rp 258 billion.

Series C and D are worth Rp 323 billion and Rp 425 billion, with coupons at 10.5 percent and 11 percent, respectively. Series C will be due in five years, while Series D will mature in seven years.

The company plans to use the bonds to pay the government for the rights to use 2G radio frequency, which Adlan said might cost the company around Rp 1.5 trillion.

The coupons set for the bonds are close to the upper level set for the bonds, which is 9.1 to 11.5 percent, however Adlan said that his company had thoroughly matched the bonds with the company'€™s liabilities profile.

Adlan said that the company had chosen sukuk as a means for financing because XL wanted to be at the forefront of the government'€™s aim to boost Islamic bonds.

He said the company planned to issue the next stages of the bonds according to its future needs.

XL plans to allocate Rp 7 trillion in capital expenditure next year, most of which will be used to build a long-term evolution (LTE) network.

'€œThe telecommunications industry is expected to grow in between mid-to-high next year. We want to grow above the industry,'€ he said.

XL Axiata is in an aggressive mode to trim its foreign-denominated debts and reduce currency exposure to its bottom line, having paid up and converted loans amounting to US$480 million in less than two months.

XL foreign-denominated loans had negatively contributed to the company'€™s financial performance as it incurred Rp 506.55 billion in net losses in the first nine months of the year.

In the same period of last year the company booked Rp 837.38 billion in losses to its bottom line, as its loans ballooned after acquiring Axis Telekom Indonesia.