Indonesia

Indonesia’s biggest listed clothing firm Sri Rejeki Isman has appointed Helios Capital and Assegaf Hamzah & Partners to represent the company in its debt restructuring process, Bloomberg News reported. The company, known as Sritex, has been trying to extend a dollar loan’s maturity by two years to January 2024. The loan was announced in 2019 and had a deal size of $350 million, according to data compiled by Bloomberg.
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PT MNC Investama, an Indonesian media and property conglomerate that has a tie-up with former President Donald Trump’s company, said it received court approval for its debt plan after agreeing to lower its standalone borrowings by 65%, Bloomberg News reported. The approval by the High Court of Singapore paves the way for the company founded by tycoon Hary Tanoesoedibjo to issue new notes and shares for investors of its distressed bonds as it restructures its debt. Under the agreement, MNC Investama will cap its debt at $81 million, it said.

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Pandemic Taking Heavy Tolls On SOEs

The economic crisis brought about by the COVID-19 outbreak has hit state-owned enterprises (SOEs) in the energy, transportation and infrastructure sectors, a top government official has said, The Jakarta Post reported. Deputy SOEs Minister Kartika “Tiko” Wirjoatmodjo said SOEs in the energy sector, such as electricity giant PLN and oil and gas company Pertamina, had suffered severe losses amid low demand during the health crisis.

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The head of Indonesia’s flag carrier said better terms on aircraft loans will help it avoid falling into bankruptcy as the nation grapples with surging coronavirus cases, Bloomberg News reported. “We discussed the risks, the benefits, the pluses and minuses and the company’s leadership decided against it,” PT Garuda Indonesia President Director Irfan Setiaputra said when asked in a Sept. 18 interview about considering bankruptcy proceedings.

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Foreign investors are unlikely to rush back into Indonesian markets until either it pays more for its debt or gives hard evidence it will not push the central bank into longer-term monetary financing of public borrowing, fund managers say, Reuters reported. External demand for government debt in Southeast Asia’s largest economy, normally prized for 7% yields that are increasingly rare even in the world’s emerging markets, has slumped since March with foreign holdings hitting a decade-low in August.

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Fitch Ratings has downgraded Indonesia-based developer PT Modernland Realty Tbk's (MDLN) Long-Term Issuer Default Rating (IDR) to 'C' from 'CC,’ Fitch Ratings reported. Fitch has also downgraded the rating on the USD150 million notes due 2021 and USD240 million notes due 2024 issued by its wholly owned subsidiaries, JGC Ventures Pte. Ltd. and Modernland Overseas Pte Ltd, respectively, and guaranteed by MDLN, to 'C' from 'CC'. The Recovery Rating on the notes remains at 'RR4'.

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Indonesia’s second-largest lender by assets says the nation’s companies are set to demand more loans, as they scoop up assets made cheaper by the pandemic, Bloomberg News reported. Some buyers are interested in assets that have become available after the virus and measures to stem it hurt Indonesia’s economy, Alexandra Askandar, corporate banking director at PT Bank Mandiri, said in an interview last week. Growth in loans to large businesses will likely accelerate in the second half from an expansion of 3.4% in the first six months, she said, declining to give an exact target.

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Indonesia’s flag carrier needs cash fast as losses soar past a half-billion dollars and unpaid bills pile up, yet negotiations for government aid move slowly and still may not yield enough to cover the shortfall, Bloomberg News reported. A first-half loss of $713 million, announced last week, was just the latest piece of bad news for PT Garuda Indonesia. The airline already missed a payment on an asset-backed security in late July, shortly after extending the repayment of a $500 million sukuk -- an Islamic bond -- by three years because of its cash crunch.

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Bank Indonesia’s unprecedented move to buy about $27 billion in bonds directly from the government may prove to be an exception rather than the norm in emerging markets, Bloomberg News reported. With the world economy in crisis and Modern Monetary Theory gaining attention, governments are being pressured to spend more and turn to their central banks to print money to foot the bill. But when it comes to scooping up that debt, most central banks are doing it in the secondary market. Three weeks on, currency and bond markets appear to have given Indonesia a pass on its direct financing foray.

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Southeast Asian low-cost carriers, a key growth engine for planemakers and leasing companies for a decade before the pandemic, are faltering financially as demand plunges, raising questions over whether they can replace and double their fleets, the International New York Times reported on a Reuters story. Auditors for Malaysia's AirAsia Group Bhd and Vietnam's VietJet Aviation JSC are concerned about cashflows and funding, while Indonesia's Lion Air has put the brakes on a planned flotation.

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