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MIND.ID unlikely to issue new bonds until Freeport pays dividends
Demand for MIND.ID's latest global bond offering was oversubscribed by a factor of 6.4, indicating strong investor appetite.
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A worker operates a heavy equipment at the PT Freeport Indonesia mine in Timika, Papua. (Courtesy of/PT Freeport Indonesia)
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tate-owned mining holding company MIND.ID is not planning to issue new bonds after raising US$2.5 billion in its latest debt offering as it expects to receive dividends from a recently acquired mining operation.
MIND.ID president director Orias Petrus Moedak said on Friday that the company was unlikely to issue new global bonds until after miner PT Freeport Indonesia started paying dividends to the holding company in 2021. The influx of dividends would lower MIND’s debt-to-earnings ratio, which was currently considered too high.
Read also: Freeport cuts workforce at Grasberg mine as coronavirus cases in area rise
“We also have no need for [additional credit]. Our funding needs have been met with this latest offering,” he said.
The mining holding company, which operates under the name PT Indonesia Asahan Aluminium (Inalum), raised $2.5 billion from a global bond offering earlier this month. The bonds were oversubscribed by a factor of 6.4, indicating strong investor appetite. They consisted of $1 billion in five-year bonds with a 4.75 percent coupon rate, $1 billion in 10-year bonds with a 5.45 percent coupon rate and $500 million in 30-year bonds with a 5.8 percent coupon rate.
Orias said foreign investors were attracted by the bonds' competitive rates relative to the company’s ratings of Baa2 and BBB- from rating agencies Moody’s and Fitch, respectively.
“Investors also looked at our corporate governance and future plans. American investors, particularly, were interested in the long term tenures,” he told reporters via videoconference.
State-Owned Enterprises (SOEs) Minister Erick Thohir said in a statement on Tuesday that the appetite "proves that international businesses still trust Indonesian SOEs”.
Read also: Explainer: New rules in revised Mining Law
Of the total funding, 40 percent is slated to be used to refinance older bonds at lower interest rates, added the minister.
The remaining 60 percent will be used to acquire Brazil-based nickel mining heavyweight PT Vale Indonesia and pay off subsidiaries’ debts.
Prior to Vale, MIND.ID acquired a majority stake in Freeport Indonesia, previously owned by United States-based mining giant Freeport McMoRan, which operates the world’s largest gold mine located in the poverty-stricken Papua province.
