Indonesia state-own construction PT Waskita Karya Tbk (WSKT) and public listed property developer PT Surya Semesta Internusa Tbk (SSIA) have both delayed there respective bonds issue of Rp1.5 trillion ($183 million) and $200 million, amid lower demand and global turmoil.
Waskita, which had originally planned to have bond issue this year – following a successful rights issue earlier – has postponed it to the next year. The company raised Rp5.3 trillion from issuing new shares (rights issue) in June by representing 29.1 per cent of its paid-up capital.
While, Surya Semesta has shelved its plans to issue $200 million bonds due to bearish market sentiments. Shareholders of the company approved the dollar-denominated bonds plan during an extraordinary shareholders’ meeting on June 9.
“This year, we are unlikely to issue bonds, as the proceeds from the rights issue alone are enough (to finance the company projects],” Muhammad Choliq, a director of Waskita, said.
Choliq said the company plans to issue the bonds next year. The bonds were part of a Rp2 trillion serial-bonds issuance approved by the Financial Services Authority.
The company had raised Rp500 billion from issuing bonds last year, with the help of Bahana Securities as underwriter.
The company will focus on investing in the toll road business this year, Choliq said, adding that Waskita was opening the bid for other contractors, who could now get involved in the Solo-Ngawi-Kertosono toll road project in Central Java province and the Kualanamu-Tebing Tinggi toll road in North Sumatra province.
The company booked better-than-expected new contracts so far this year, Choliq informed,adding that it has boosted the company’s confidence enough to increase the contracts target to Rp30 trillion this year, compared to the initial target of Rp22 trillion.
“Since the market is not conducive right now, the company’s board has decided not to pursue the bonds issuance further,” the company said in a statement.
Surya Semesta Internusa, which operates a number of five-star hotels in the country, such as Gran Melia Jakarta, as well as industrial estate, had intended to offer up to $200 million of dollar-denominated bonds on the Singapore Exchange this year through its industrial subsidiary, Suryacipta Swadaya.
The company was planning to use funds from the bond issuance to improve its liquidity as well as acquire and develop more land, to expand its industrial estate in Karawang, West Java.
Uncertainties in the global market, dragged by anxious investors ahead of a looming US Federal Reserve interest rate hike, have taken a toll on the local capital market, with the Jakarta Composite Index falling 8.7 per cent, so far this year and market capitalisation having fallen by roughly 4 per cent since the beginning of the year.
In the meantime, Surya Internusa is still evaluating and assessing other financing alternatives, such as bank loans or bond issuance in another currency.
The company has been unable to raise funds to support its business operation and expansion plans this year and it is not alone. At least four out of nine initial public offerings in Indonesia this year have been downsized by a range of 30 per cent to 50 per cent.
Indonesia booked its slowest growth since 2009 during the first half of the year at an annualized rate of 4.67 per cent, as the rupiah fell nearly 9 per cent to 13,536 against the dollar so far this year.