The bond offering is the first phase of the shelf registration of conventional bonds (PUB) II for 2020 with a total value of Rp 8 trillion and is scheduled for Aug. 14 to 18. 

“We are planning to use the proceeds to refinance our loans, either for the holding company or its subsidiaries. This is part of the company’s strategy to diversify external funding, aside from banks,” Pupuk Indonesia president director Aas Asikin Idat said during a virtual press conference on Monday. 

The bonds will be issued in three series: the A series bonds have a tenure of three years with a coupon rate of 6.25 percent to 7.50 percent, the B series have a tenor of five years and a rate between 7 percent and 8.30 percent, while the C series will mature in seven years with a rate of 7.50 percent to 8.75 percent. The coupon payments will be made quarterly. 

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Rating agency Fitch Ratings Indonesia has assigned a national long-term rating of AAA (idn) for Pupuk Indonesia’s Rp 8 trillion bond program, as well as its first issuance under the program, as stated in a rating action commentary published on July 15. The triple-A rating is the highest rating assigned by the agency, which indicates the lowest expectation of default risks relative to other obligations in the country. 

Indonesian rating agency Pemeringkat Efek Indonesia (Pefindo), on the other hand, has assigned the company a rating of idAAA, Pefindo’s highest rating, and said in a press release published on March 26 that the outlook for the company’s corporate rating was stable.

“The corporate rating reflects the strong support Pupuk Indonesia has received from the government, given its important role in providing and distributing subsidized fertilizer in the country,” analysts Niken Indriarsih and Umar Harreddy said in the press release. 

Pupuk Indonesia finance director Indarto Pamoengkas said during the press conference that the pandemic had adversely affected the company’s sales but it was still able to record growth during the health crisis.

“As of May, we saw a 10 percent annual increase in revenue,” Indarto said. 

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According to Pupuk Indonesia’s statement published following the press conference, the company’s net profit grew 11.7 percent year-on-year (yoy) to Rp 1.6 trillion from Rp 1.43 trillion during the January-May period. Its revenue from the sales of commercial fertilizer rose by 38.35 percent to Rp 7.54 trillion as the volume of the commercial fertilizer sold soared by 47.45 percent to 2.01 million tons. 

Meanwhile, the company reported that the sale of its subsidized fertilizer or public service obligation (PSO) product from January to May amounted to 3.93 million tons. 

In 2019, the company booked a net profit of Rp 3.71 trillion, down by 11.9 percent from 2018’s net profit of Rp 4.12 trillion. Its total sales and other revenue, including from products sold and subsidy reimbursements from the government, amounted to Rp 71.31 trillion, up 2.68 percent yoy.

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