Secondary mortgage market firm PT Sarana Multigriya Finansial (SMF) and an asset management firm that specializes in managing risky assets, PT Perusahaan Pengelolaan Aset (PPA), announced on Sept. 25 that they would soon issue commercial papers to raise funds for their business expansions.

SMF director Heliantopo said the company intended to issue a Rp 200-billion (US$14.06 million) commercial paper with a tenure of 12 months in the near future. “We’ve also received a rating of idA1+ from [credit rating agency] Pefindo,” he said during a focus group discussion in Jakarta.

Meanwhile, PPA director Iman Rachman said the company was in the process of obtaining a credit rating on its Rp 100 billion (US$7.03 million) worth of commercial papers, which would be due in 12 months. The company’s spokesperson Edi Winanto added that it expected its first commercial papers to be issued in October.

The short-term debt papers from the two companies marked the first issuance of such financial instruments since they became dormant more than a decade ago. “The last recorded commercial paper issuance in Indonesia was in 2005,” Destry Damayanti, BI senior deputy governor said during her speech in Jakarta.

The debt papers were popular among non-bank companies in the 1990s. Many of them used them to seek short-term funding in the country’s money market. Although they was deemed a good instruments for companies, they also had some negative stigma built around them.

“Banks endured a lot of unsavory experiences during those times and they even became a nightmare for the industry,” Destry said during her speech at the Indonesia Stock Exchange building in Jakarta.

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