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Mining firm Delta Dunia explains rationale behind rupiah bond issuance
Delta Dunia director Iwan Fuad Salim says the firm needed to diversify its financing sources to remain competitive.
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King coal: Barges piled high with coal are seen on Aug. 16, 2022, in the waters of Samarinda, East Kalimantan. (AFP/Adek Berry)
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ndonesian mining firm PT Delta Dunia Makmur says it opted for rupiah-denominated bonds this year because of the lower interest rates on debt compared to United States dollar-denominated bonds.
Delta Dunia director Iwan Fuad Salim said the interest rate difference between the two types of bonds could be as wide as 2 percentage points.
“I think the key is to diversify our [financing]. Not only global bonds, but also rupiah bonds. Not only [loans from] conventional banks, but also [from] sharia banks. We need to continue exploring opportunities to ensure the company remains competitive,” he said during a public briefing on Tuesday.
In December last year, Delta Dunia issued its first rupiah bonds, raising Rp 636 billion (US$40.08 million) through its subsidiary PT Bukit Makmur Mandiri Utama. Previously, the firm had only issued dollar bonds.
In the same month, the company also secured a syndication loan of approximately $750 million from state-owned lender BNI.
Ten months later, the company issued the second rupiah bond worth Rp 1 trillion ($63 million), which was oversubscribed by 1.4 times.
“The second issuance was better, as more investors opted for longer-term coupons. Perhaps they see that the company is on track in terms of performance, so when another opportunity arises, they invest with larger funds,” Iwan said.
