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SMF issues bonds to finance mortgages
State-owned secondary mortgage firm PT Sarana Multigriya Finansial (SMF) has issued shelf-registration bonds totaling Rp 1 trillion (US$74 million) as part of its attempt to collect Rp 12 trillion in funds to finance mortgages
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tate-owned secondary mortgage firm PT Sarana Multigriya Finansial (SMF) has issued shelf-registration bonds totaling Rp 1 trillion (US$74 million) as part of its attempt to collect Rp 12 trillion in funds to finance mortgages.
The issuance of the debt papers was divided into two series, Series A and Series B. Bonds included in the former are offered with a 370 day-tenor and a 6.25 percent coupon rate each year, expected to garner Rp 327 billion.
Meanwhile, those under the latter series, which are set with a coupon rate of 7.25 percent, will mature in three years and may raise Rp 673 billion in cash.
SMF president director Ananta Wiyogo said the bonds were oversubscribed by almost four times, reaching Rp 3.88 trillion in total, which indicated investor interest.
He attributed the positive response to the bonds to the company’s idAAA rating by local rating firm PT Pemeringkat Efek Indonesia (Pefindo).
The idAAA rating normally reflects a company’s ability to fulfill its long-term financing.
“The house mortgage business is also solid with little risk, while the coupon rate is also attractive,” Ananta said, adding that the non-performing loan (NPL) ratio of SMF was also well-maintained at 0 percent.
SMF aims to funnel the proceeds of the bonds issuance to mortgage lenders as part of its move to support the government-backed one-million-house program, intended to reduce the country’s significant housing backlog.
As of September, the company had channeled Rp 4.2 trillion in financing from its overall target of Rp 5.2 trillion for this year.
SMF is set to roll out new bonds in the first quarter of next year. Of the Rp 12 trillion ceiling of the shelf registration bonds, only Rp 2 trillion worth of bonds were issued.
Until present, it has already introduced bonds 29 times with a total value of Rp 19.2 trillion.
Currently, the outstanding value of bonds for the company’s secondary housing financing reaches Rp 8.2 trillion.
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“The house mortgage business is also solid with little risk, while the coupon rate is also attractive.”
SMF director Trisnadi Yulrisman said that since it was established in 2005, SMF had distributed Rp 32.64 trillion in funds raised from the capital market to lenders of housing loans, locally known as KPR.
The financing consisted of disbursed loans of Rp 24.49 trillion and securitization of Rp 8.15 trillion.
For mortgage financing, SMF has been working with one commercial bank, six shariah banks, 11 regional development banks (BPD) and three multi-finance companies.
Meanwhile, for the securitization, the firm has teamed up with state-owned lenders Bank Tabungan Negara (BTN) and Bank Mandiri.
SMF declined to elaborate on its financing target for next year, but said it estimated its business prospects might be quite challenging because of political risks ahead of the coming general election in 2019.
“However, we are [still] optimistic that we can run our business as usual,” Ananta said.
Another challenge includes its supposed increased role in mortgage financing because of a limited state budget.
As of September, SMF managed to post Rp 319 billion in net profit and it hopes to meet its full year target of Rp 359 billion.
