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Jakarta Post

Garuda issues Rp 2t asset securitization

  • Farida Susanty

    The Jakarta Post

Jakarta   /   Tue, July 31, 2018   /   12:41 pm
Garuda issues Rp 2t asset securitization A Garuda Indonesia aircraft ( X p o s e)

In its latest corporate move, National flag carrier Garuda Indonesia issued on Tuesday asset-backed securities under collective investment contracts (KIK-EBA) totaling Rp 2 trillion (US$138.7 million) on the Indonesia Stock Exchange (BEI).

The airline used the KIK-EBA as an instrument for asset securitization for its potential revenue from ticket sales for flights from Indonesia to Jeddah and Madinah.

The Jeddah and Madinah routes are particularly popular for haj and umrah(minor haj) pilgrimages.

State-Owned Enterprises Minister Rini M. Soemarno said the KIK-EBA would serve as an alternative source of financing for Garuda Indonesia as it seeks to expand its operations.

"I hope this initiative will help improve Garuda Indonesia's performance and also support the government's program to increase air connectivity," she said in an official statement.

Rini also urged more state-owned enterprises and private sector companies to conduct asset securitization.

Previously, state-owned electricity company PLN through its subsidiary Indonesia Power, state-owned toll road operator Jasa Marga and state-owned lender PT Bank Tabungan Negara also conducted asset securitization.

"Several state-owned-enterprises have successfully issued [asset] securitization and gained positive responses from investors. So the government will keep pushing more state-enterprises to do the same," she said.

Garuda Indonesia's KIK EBA is split into A class and B class.

The A class KIK EBA received an AA+ rating from rating agency Pefindo and has a 5 year duration worth Rp 1.8 trillion with a 9.75 percent return per annum, while for the KIK EBA B class, the airline is providing a limited offer worth Rp 200 billion with a similar duration, but with an decided return. (bbn)