I

t has taken 71 years for state port operator Pelabuhan Indonesia I (Pelindo I) to offer bonds to the
market. The long wait appears to have paid off as investors rush to purchase the bonds, perhaps thanks to the firm’s promising outlook surrounding major container and passenger ports.

The latest data shows that investor subscription requests reached Rp 7.5 trillion (US$563.9 million), much higher than the Rp 1 trillion in bonds the company is offering.

Pelindo I president director Bambang Eka Cahyana said investors were attracted by the bright business outlook forecast for the country’s major passenger and container ports, adding that the business was relatively resistant to economic conditions.

“Not only are local investors eager to buy the bonds, foreigners are too, including Singaporeans,” Bambang said during the bond listing at the Indonesian Stock Exchange on Wednesday.

The Rp 1 trillion bond offer consist of four different series of debt papers: the A series will have a maturity period of three years and offers an 8.25 to 9 percent coupon rate, while the five-year B series carries a 9 to 9.5 percent coupon rate. The seven-year C series will have a 9.25 to 10 percent coupon rate and the 10-year D series, a 9.5 to 10.25 percent coupon rate.

The firm, which secured its investment grade from rating agencies Fitch Ratings Indonesia and Pemeringkat Efek Indonesia (Pefindo), has appointed Mandiri Sekuritas as underwriter for the bond issuance.

Apart from the relatively low cost, Bambang said, the firm chose bond issuance as an alternative funding source as it wanted to be more transparent as a state company. Companies who issue bonds are required to partake in frequent public expose, he explained.

Pelindo I plans to allocate Rp 2.5 trillion this year for capital expenditure (capex), with Rp 1 trillion sourced from bond issuance and the remaining Rp 1.5 trillion from internal cash.

Bambang said 80 percent of the Rp 1 trillion bond issuance had been purchased by corporate investors, the remaining 20 percent by retail investors.

“We want varied composition so as to always make it attractive. We plan to issue another Rp 2 trillion in bonds next year,” he said.

Established soon after the country’s independence in 1945, the company currently oversees 16 ports in Sumatra.

Pelindo I website data shows that 54 percent of the proceeds from the bond issuance will be used to build facilities at the Belawan and Sibolga Ports in North Sumatra, Dumai and Perawang Ports in Riau and Malahayati in Aceh. The remaining funds will be used, among other things, to buy new equipment to improve container handling in Kijang Port in the Riau Islands and to develop a hospital at Belawan Port, North Sumatra.

As of earlier this month, Bambang said the firm had disbursed around 30 percent out of the planned capex. The funding has been used to fund various projects aimed at reducing dwelling time at Belawan Port, one of the country’s biggest ports, from four days to three days by August.

“We’ve built an integrated center for customs and quarantine at Belawan, this center started operating on June 1,” he said.

Pelindo I also claims to have revamped facilities for ship passengers in Belawan to offer better services, especially during the upcoming Idul Fitri mass exodus.

“I want the port users, who mostly come from the lower middle income segment, to enjoy a level of services like those in an airport,” Bambang said, adding that the recent Belawan Port upgrade had included a new VIP room and sky bridge.