Pupuk Indonesia plans to release bonds worth a total of Rp8 trillion under its Sustainable Public Offering (PUB) II.
The bond issuance is part of the company's strategy to diversify external funding sources apart from banks, president director of Pupuk Indonesia, Aas Asikin Idat, said here on Monday
"In addition to diversifying funding sources, this is one of our efforts to reduce interest rate volatility by switching from variable rate to fixed rate, so that we can have long-term efficiency," he said at an online press conference.
The bond funds will be used for re-profiling debt (bank loans and bonds), both at the parent company and subsidiaries.
Idat said he is optimistic the bond issuance target can be absorbed by the market given the company's stable performance, which has, in fact, shown an improvement, even amid the COVID-19 pandemic.
In the first phase of PUB II this year, Pupuk Indonesia will release bonds in three tranches: Series A with a 3-year tenor, Series B with a 5-year tenor, and Series C with a 7-year tenor. Interest payments will be made quarterly, calculated using the 30/360 convention.
For Series A bonds with a tenor of 3 years, the coupon is offered at 6.25-7.25 percent; Series B with a 5-year tenor of 7-8.30 percent; and, Series C with a 7-year tenor of 7.5--8.75 percent.
The initial bond offering period is July 16-30, 2020, while the public offering is scheduled for August 14-18, 2020.
Pupuk Indonesia has appointed PT Bahana Sekuritas, PT BCA Sekuritas, PT BNI Sekuritas, PT Danareksa Sekuritas, PT Mandiri Sekuritas as Joint Lead Underwriters (JLU), and PT Bank Mega Tbk as trustees for the bond offering.
Pupuk Indonesia's sustainable bonds have received ‘AAA (idn)’ rating from PT Fitch Ratings Indonesia. The bonds are being issued without special collateral (clean basis).
Related news: Pupuk Indonesia fertilizer production hit record high in 2019
Pupuk Indonesia is a state-owned enterprise (BUMN) which has 10 subsidiaries with an integrated business scope. The enterprise has five fertilizer producers — PT Pupuk Iskandar Muda, PT Pupuk Sriwidjaja Palembang, PT Pupuk Kujang, PT Petrokimia Gresik, and PT Pupuk Kaltim.
It also has five non-fertilizer subsidiary companies: PT Rekayasa Industri, PT Mega Eltra, PT Pupuk Indonesia Energi, PT Pupuk Indonesia Logistik, and PT Pupuk Indonesia Pangan.
Pupuk Indonesia plays an important role in securing fertilizer supply to support the national food security program. The company has been assigned by the government to distribute fertilizers at a subsidized rate (Public Service Obligation) to all regions in Indonesia. In addition, it also sells its products to domestic commercial markets and in export markets.
In 2019, Pupuk Indonesia distributed and sold 13.76 million tons of subsidized and non-subsidized fertilizers and non-fertilizer products.
Its total income from fertilizers in 2019 stood at Rp71.3 trillion, an increase of 10 percent annually on average. Meanwhile, the BUMN’s profit increased by an average of 10 percent per year from 2017 to 2019.
Last year, Pupuk Indonesia booked a current year profit of Rp3.71 trillion, with its total assets valued at Rp135.55 trillion.
The company has managed to maintain its ranking as the top 10 global fertilizer companies based on total assets, revenue, EBITDA (earnings before interest, taxes, depreciation, and amortization), and net profit.
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