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Indomobil Finance Indonesia, the auto financing unit of Indomobil Sukses Internasional, is set to sell Rp 4 trillion ($448 million) in bonds in a bid to expand its automotive consumer lending business.

Gunawan, a director of Indomobil Finance, said on Friday that the company will sell Rp 750 billion in the second quarter of this year, with the remaining Rp 3.25 trillion to be sold in the next two years. He didn’t say when the bonds would be listed on the Indonesia Stock Exchange (IDX).

Since last year, the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) has allowed companies to sell bonds in stages for up to two years, scrapping a previous rule that allowed them to issue once a year.

Many companies are also selling bonds to capitalize on low borrowing cost following the recent sovereign debt rating upgrades from Moody’s Investors Service and Fitch Ratings.

Astra Sedaya Finance, a car financing unit of auto distributor Astra International and Indomobil Sukses’s biggest competitor, plans to sell Rp 2 trillion in bonds in February so that it can use proceeds to provide financing to customers on their purchases on vehicles. Astra Sedaya has three different maturities: one, three and five years.

Indomobil Finance is aiming to extend Rp 4 trillion of auto financing this year, Gunawan said.

Gunawan said that the Indomobil group would help the company reach its target this year, but did not elaborate. He said that proceeds from this year’s bond sale will be used to finance loans for car purchases.

“We believe in our holding, the Indomobil group, due to its strong and extensive network in the country,’’ Gunawan said.

Shares of Indomobil Sukses Internasional, the second largest auto distributor in Indonesia, fell 3 percent to Rp 15,050 on the IDX on Friday.

Investor Daily