S

tate-owned listed PT Pembangunan Perumahan (PTPP) is planning to sell bonds amounting to Rp 1 trillion within two years to finance its ongoing work and expansion project.

In the first phase, PTPP will sell Rp 700 billion debt papers, according to an announcement made public on Tuesday. The debt papers will mature in five years and have been granted A- rating from PT Pemeringkat Efek Indonesia (Pefindo).

The construction company has appointed PT Bahana Securities, PT CIMB Securities Indonesia and PT Mandiri Sekuritas as the underwriters for the bond issuance. The company will start the book building period of the bonds on Feb. 13–27, while the offering period will fall on March 13–14. The debt papers are scheduled to be listed on the Indonesia Stock Exchange (IDX) on March 20.

“We issue bonds instead of seeking loans for our projects because the debt papers have a maturity date that is in line with our expansion,” PTPP corporate secretary Betty Ariana said on Tuesday.

According to its prospectus, PTPP, which is 51 percent owned by the government, will use 40 percent of funds to be raised from the first phase of debt papers to be issued to support several infrastructure projects, including buildings, roads, ports and bridges.

Another 30 percent will be used as working capital for the company’s engineering procurement and construction (EPC) projects, such as power plant as well as conveyor and stock yard for coal. The remaining 30 percent will be used as capital for property projects, including a commercial center and apartment development in Surabaya, East Java, as well as a residential project in Jakarta.

Betty said that her company would develop a commercial center and apartment on 3.8 hectares of land on Jl. Mayjen Sungkono in Surabaya. These projects, according to Betty, needed a total investment of around Rp 500 billion and would be carried out gradually over three years.

For the property project in Jakarta, Betty said that PTPP would develop a residential project of 10-story flats in the Kalimalang area. This project is estimated to cost around Rp 2 trillion, according to Betty.

PTPP is targeting to reap Rp 19.7 trillion in new contracts by year-end, increasing by only 1 percent compared to last year’s achievement of Rp 19.5 trillion.

“The increase is minor because we won big projects last year. In normal calculations [without the big project], we would have grown by about 20 percent,” Betty said, referring to a Rp 9 trillion project to develop the Kalibaru Port. As of the end of January, PTPP had collected Rp 1.1 trillion in new contracts.

“Most are construction projects in the range of Rp 100 billion to Rp 300 billion,” Betty said.

The market responded to PTPP’s bond issuance plan negatively. Its shares were closed at Rp 880 apiece on Tuesday, declining by 2.22 percent compared to Rp 900 a day earlier.