S

tate-owned construction company Waskita Karya and toll road operator Jasa Marga are set to issue bonds in the first half of this year to finance projects ranging from toll roads to power transmission, as well as to refinance debts.

Waskita Karya finance director Tunggul Rajagukguk told reporters on Thursday that his company was preparing to issue bonds up to Rp 2 trillion (US$144.44 million) around the end of the first half of the year.

The debt papers will be part of a series of bonds amounting to Rp 5 trillion to be issued in the next two years.

He added that the Rp 2 trillion bonds would be issued in two series, with tenors due in three and five years, respectively.

Tunggul added that his company decided to go for bonds to meet its funding needs due to their flexibility compared to bank loans that usually matured in a year.

'€œProceeds from the bonds will be used for our working capital, to finance construction of projects, particularly for those projects that will take two years or more to conclude. We'€™re going for continuous bonds because we need financing for our multi-year projects'€ he said on the sidelines of Mandiri Sekuritas'€™ 2016 Investment Forum.

The projects will include toll roads; a light rapid transit (LRT) project in Palembang, South Sumatra; as well as a power transmission project in Sumatra.

According to media reports, the Palembang LRT project is expected to absorb around Rp 7.2 trillion of investment, with a 2015 presidential regulation obliging Waskita, which is leading the project, to conclude the construction before June 2018.

Tunggul said that the company was set to commence construction in the third quarter of the year.

As for the power transmission, Waskita has signed an agreement with state-run electricity company PLN to work on the first two sections of PLN'€™s 1,400-kilometer transmission grid project in Sumatra.

Waskita has been awarded a 395-kilometer grid connecting Jambi and Riau, and construction is targeted to conclude in around three years.

Waskita, Tunggul said, would need around Rp 10 trillion to finance a number of projects this year. The company is aiming to see its new contracts double from Rp 30 trillion last year to Rp 60 trillion this year.

The company had yet to appoint underwriters for the bond issue, and was currently in talks with a number of potential brokers.

In the company'€™s previous bond issues, Waskita appointed Bahana Securities, Danareksa Sekuritas and Mandiri Sekuritas as its underwriters. The company previously issued Rp 2 trillion of bonds divided into two stages, comprising Rp 500 billion issued in 2014 and Rp 1.5 trillion in 2015, also to finance the company'€™s toll road projects.

Separately at the same event, Jasa Marga finance director Reynaldi Hermansjah said the company was also planning to issue at least Rp 1.5 trillion of bonds in the first half of this year, which will be used to refinance the company'€™s debts.

Reynaldi said the debt papers would be the first in a series of continuous bonds, adding, however, that the company was still determining the exact figure for the bonds.

'€œWe will issue at least Rp 1.5 trillion because we have maturing loans amounting to this sum. As the loans will mature in the first half, we will have to issue the bonds before that,'€ he explained.