Mandiri Finance Delays Debt Sale to 2014

By Elizabeth Gloria Brahamana on 03:27 pm Sep 26, 2013

Mandiri Tunas Finance, the financing unit of Bank Mandiri, the country’s largest lender by assets, has delayed its planned bond issue to next year, saying that the current market volatility offered too much uncertainty.

The rupiah weakness and rising borrowing costs have forced a number of local companies to either postpone or cut the size of their proposed bond sales.

Harjanto Tjitohardjojo, a director of the Jakarta-based finance company, which mostly finances motorbike and cars, said the company has had to postpone its planned sale of Rp 750 billion ($65 million) to 2014 from the original plan of later this year.

“We are going to go ahead with the debt sale during the first half of next year,” Harjanto told Investor Daily on Wednesday.

Indonesia’s rupiah, which has fallen by 19 percent so far this year, traded at 11,569 against the US dollar on Wednesday.

A falling rupiah would boost exporters’ competitiveness but at the same time will increase costs for importers that have to pay in US dollars.

Mandiri Tunas Finance plans to sell Rp 1.25 trillion worth of bonds within two years. The company, which Bank Mandiri took over three years ago, sold Rp 500 billion in May this year.

Mandiri Tunas finance is just one subsidiary of state-owned Bank Mandiri. The lender, with total assets of more than Rp 650 trillion, has an insurance unit, a securities firm through Mandiri Sekuritas and Bank Sinar Harapan Bali, a small lender based in Denpasar, under its umbrella.

Harjanto said Mandiri Tunas Finance is targeting total lending of Rp 14 trillion in 2013. It had reached Rp 7.5 trillon by the end of August, he said.

The finance company was able to increase that sum further in September with Rp 1 trillion in loans, and that has encouraged it to feel confident that it is on target to achieve their target for the current year.

Mandiri Tunas Finance is currently 51 percent controlled by Bank Mandiri and 49 percent by Tunas Ridean, according to its website.

Many Indonesian commercial lenders have their own financing units. Bank Danamon Indonesia, for instance, controls Adira Finance; Bank Central Asia has its BCA Finance and Bank Internasional Indonesia has BII Finance.

Bank Mandiri, created by the merger of four state lenders more than a decade ago, bought control of Tunas Ridean Financindo in January 2009 and rebranded it as Mandiri Tunas Finance.

Prior to that, Bank Mandiri Bank had gained control of Bank Sinar Harapan Bali in 2008.

Shares of Bank Mandiri fell 4 percent to Rp 8,250 on the Indonesia Stock Exchange on Wednesday, in line with losses on the broader gauge.

While Mandiri Tunas Finance has felt the need to postpone their bond issue, state owned toll road operator, Jasa Marga, announced Wednesday it will go ahead with its debt sale as planned, it announced on Wednesday.

The company plans to raise Rp 2.1 trillion from selling one, three and five-year bonds later this month, part of its larger plan to sell Rp 5.9 trillion over the next two years.