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Jakarta Post

Wika turns to perpetual bonds, subsidiary IPOs to boost financing capacity

  • Riska Rahman

    The Jakarta Post

PREMIUM
Jakarta   /   Mon, October 21, 2019   /  12:11 pm
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Workers check precast concrete produced by PT Wijaya Karya Beton at its factory in Cileungsi, Bogor, West Java . State-owned construction company PT Wijaya Karya (Wika) will issue perpetual bonds next year to boost its financing capacity.(Antara/M Agung Rajasa)

PT Wijaya Karya (Wika) has planned a number of corporate actions ranging from issuing another perpetual bond to selling shares of its subsidiaries through an initial public offering (IPO). The company’s president director Tumiyana said on Friday that the state-owned company expected to raise about Rp 1 trillion (US$71.5 million) from the issuance of its second perpetual bond next year. A perpetual bond is a debt paper that has no maturity date and is often considered as equity rather than debt. Given the nature of the instrument, investors can get a steady stream of cash from the interest payments as long as the issuer does not make a call option for the note. However, this creates a drawback for investors as they are unable to redeem the bond. “With the bond we aim to increase our equity and also increase our debt capacity,” Tumiyana said, adding that the issu...