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isted lender PT Bank CIMB Niaga began offering investors up to Rp 2.5 trillion (US$255 million) in debt papers on Monday, with the aim of expanding and becoming more efficient.

'€œAll the funds raised from the bond issuance will be used to support lending, which in turn will support CIMB Niaga'€™s business in the future,'€ CIMB Niaga vice president director James Rompas said on Monday.

James said CIMB Niaga would disburse the funds for consumer credit, such as vehicle financing and mortgages.

However, he added, the bank was still assessing the possible impact of the planned fuel increase in lending money to the consumer sector.

'€œIt is also likely that we will lend money to the corporate sector, which needs to mix [loan] interest rates,'€ James said, pointing out that corporations usually borrowed money from different banks with different tenures and interest rates.

It is the second phase of the company'€™s bond issuance amounting to Rp 8 trillion in total. CIMB Niaga launched the first phase of bonds amounting to Rp 2 trillion last year.

CIMB Niaga, the country'€™s fifth-largest bank by assets, has divided the second phase of bonds into three series, namely series A with a two-year maturity and a coupon rate of between 6.4 percent and 7.15 percent; series B with a three-year maturity and a coupon rate of between 6.8 percent and 7.55 percent; and series C with a five-year maturity and a coupon rate of between 7.35 percent and 8.1 percent.

The bonds, which have been awarded an AAA rating from ratings agencies PT Pemeringkat Efek Indonesia and PT Fitch Rating Indonesia, will be listed on the Indonesia Stock Exchange (IDX) on July 4. The IDX has welcomed 22 conventional and Islamic bond issuances from 19 companies, resulting in Rp 25.09 trillion of total funds raised year-to-date.

CIMB Niaga reported a 13 percent increase in lending to Rp 147.06 trillion in the first quarter of the year compared to Rp 129.83 trillion for the same period last year. The company expected to increase its lending by around 18 percent this year, finance director Wan Razly Abdullah said.

'€œAlthough we only grew by 13 percent in the first quarter, we have a huge amount of lending in the pipeline, particularly in the corporate sector '€” this will contribute to an increase,'€ Razly said.

He added that the bond issuance would also help the company reduce its borrowing costs because it would have to pay less to investors buying the bonds compared to what it paid when borrowing money from depositors.

CIMB Niaga'€™s third-party funds stood at Rp 167.32 trillion as of the end of the first quarter, including Rp 89 trillion in time deposits offering a high interest rate to depositors.

Razly said the total amount of time deposits increased by 21 percent in the first quarter of the year from the same period last year.

Apart from selling the rupiah-denominated bonds, CIMB Niaga is also considering releasing dollar-denominated bonds.

'€œThe global bonds'€™ interest rate is very low. It'€™s a good opportunity,'€ Razly said.

'€œHowever, we are still assessing whether the demand is there. Moreover, our credit in foreign currencies '€” particularly to commodity-based companies '€” only grew by 2 percent due to weakening commodity prices that hindered companies from spending more,'€ he said, referring to this year'€™s first quarter growth compared to the same period last year.

CIMB Niaga shares (BNGA) were unchanged at Rp 1,360 on Monday.