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Companies jump on bond bandwagon in Q4
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UOB wealth banking office in Katong, China. (Courtesy of http://www.uobgroup.com//File)
M
ore companies will issue bonds in November encouraged by lower interest rates, allowing for a brighter outlook in the bond market for the fourth quarter of this year.
UOB Indonesia director Muljono Tjandra said on Wednesday that on the corporate side, the lower interest rates led to lower coupon payments. While consumers are looking for bonds to move their funds into from less profitable bank deposits.
"We feel the fourth quarter will be positive for the bond market, that is why we’ve chosen to issue the bonds next month," he said after a public expose on the bank's corporate bonds in Jakarta on Wednesday.
UOB Indonesia is not the only company to issue bonds in November. In the past two weeks, state-owned BRI Syariah, Permodalan Nasional Madani, Sarana Multi Infrastruktur (SMI), and airport operator PT Angkasa Pura I also announced bond issuances in November. More companies are expected to follow suit.
The government is also expected to issue sovereign bonds in the fourth quarter to cover the budget deficit.
In spite of the tight competition in the bond market, Muljono said he was not worried about UOB’s bonds. "We believe our bond still can perform in the market," he said.
The bank deposit rate fell by 100 basis points (bps) during January to September, with the rate standing at around 6 to 7 percent. The Indonesia Deposit Insurance Corporation (LPS) expects an additional 20 bps cut in the fourth quarter. (evi)
