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oll road operator PT Jakarta Lingkar Baratsatu (JLB) has issued bonds worth Rp 1.3 trillion (US$87.84 million), mainly for the purpose of debt refinancing amid rising cost of funds due to the increasing Bank Indonesia (BI) benchmark rate.

The bonds issued are divided into two tenures: series A worth Rp 875 billion with a three-year tenure and series B worth Rp 425 billion with a five-year tenure. They are offered with annual coupon rates of 9.75 percent and 10.65 percent, respectively.

The company appointed securities firms Mandiri Sekuritas and Bank Central Asia (BCA) Sekuritas as underwriters for the bonds issuance, while state-owned lender Bank Rakyat Indonesia (BRI) will act as a trustee.

“The funds will be used as debt repayment for syndicated loans [the company took] from Bank Mandiri, Bank Panin and Bank DKI,” said JLB president director Fatchur Rochman at the Indonesia Stock Exchange (IDX) building in Jakarta on Friday, adding that the syndicated loans were worth a total of Rp 1.19 trillion.

Although the syndicated loans would only be due in two or three years, Fatchur said the company decided to issue the bonds right now as interest rates were more competitive despite current fluctuations in the market.

The rest of the proceeds from the bonds issuance will be used for a corporate expansion plan next year. The company plans to acquire more toll roads in 2019, but it has yet to have any fixed program on the matter.

To date, the company operates and manages the Jakarta Outer Ring Road (JORR) W-1 section of airport toll roads in West Jakarta. It operates a 10-kilometer toll road connecting Kebon Jeruk in West Jakarta with Penjaringan, North Jakarta.

Throughout 2017, the toll road operator saw its revenue increase by 9.35 percent to Rp 485.4 billion, year-on-year (yoy). Meanwhile, its net profit also rose by 182.4 percent yoy to Rp 147.7 billion in 2017.

“We are targeting revenue from toll roads to reach Rp 490 billion in 2018, while also aiming for Rp 170 billion in net profit this year,” Anton Sujarwo, the company’s independent director, told reporters on Friday.

The revenue will be obtained from the toll road operation business and its efforts to cut costs. The firm said the conversion of toll gate management from manual to electronic could save between 10 percent and 20 percent in costs as the traffic will move more smoothly.

During the Friday event, Mandiri Sekuritas director Andy Bratamihardja said JLB’s bond issuance was oversubscribed by more than 1.5 times.

Andy said the oversubscription was a sign that investors remained buying bonds even though the capital market continued to be volatile because of external pressures, such as those caused by the rate hike trajectory of the United States Federal Reserve and escalation of the trade war between the US and China.

“Investors also take into consideration the business a company is engaged in. For example, Jakarta Lingkar Baratsatu is engaged in toll roads, which can easily be seen and observed. Therefore, it is more easily trusted by investors,” he said.

Shares of Jakarta Lingkar Baratsatu are owned by private contractor Bangun Tjipta Sarana, which controls 64.8 percent, followed by toll road operator Margautama Nusantara and private company Rekadaya Adicipta at 35 percent and 0.2 percent, respectively.

JLB’s shareholders composition has changed recently after state-owned toll road operator Jasa Marga decided to release all ownerships in the company in August in an attempt to accelerate its business expansion.