Two state-controlled companies are planning to issue global rupiah-denominated bonds (often called nasi goreng bonds). Construction company Wijaya Karya, which is listed on the Indonesia Stock Exchange, plans to issue up to USD $500 million of nasi goreng bonds in the second half of 2017. Besides the nasi goreng bonds, the company also plans to sell up to IDR 5 trillion of rupiah-denominated bonds on the domestic market.
The other state-controlled entity that plans to issue nasi goreng bonds is toll road developer and operator Jasa Marga. These nasi goreng bonds are regarded an alternative for conventional (domestic) bonds and the securitization of assets.
Donny Arsal, Finance Director at Jasa Marga, says the toll road operator needs about IDR 7 trillion (approx. USD $526 million) for the funding of its development projects in 2017. These funds need to be collected through bank loans, bonds, and asset securitization. The global rupiah-denominated bonds would open up a new pool of investors for Jasa Marga. However, Arsal emphasized that it will take a long process before these nasi goreng bonds can be sold, while he said it is currently difficult to predict the size of external interest in the company's bonds.
Salyadi Saputra, President Director of Pemeringkat Efek Indonesia (Pefindo), the government's credit rating agency, said there now exists limited demand for bonds on the domestic market and this pushes local companies to seek global bonds to collect the necessary funding.
This particularly applies to state-controlled firms for infrastructure-related development programs (as Indonesian President Joko Widodo ordered these firms to boost infrastructure development across Indonesia). While US dollar-denominated global bonds are nothing new to Indonesian companies, these bonds always carry a currency risk for the issuer (especially in uncertain times when the rupiah is vulnerable to sudden weaknesses). A US dollar-denominated bond would shift the currency risk to the foreign investor.
To reduce risks, foreign investors will be particularly interested in the credit rating of Indonesian companies that offer nasi goreng bonds (and will compare these with the ratings of other international companies that issue global bonds). A positive rating from an international credit rating agency would significantly improve demand for the nasi goreng bond. Saputra added that the yield of government bonds (SUN) will be the key reference for nasi goreng bonds.
On the domestic market there is a big supply of rupiah-denominated bonds. Based on Pefindo data, a total of IDR 109.73 trillion (approx. USD $8.25 billion) worth of corporate bonds have been issued this year up to August 2017 by 72 national companies. The figure is expected to rise up to IDR 153 trillion before the year-end.
Bintang Perbowo, President Director of Wijaya Karya (Wika), said his company obtained a domestic AA rating with a stable outlook from Fitch Ratings. This is a positive rating, only two notches below the central government's sovereign risk level.
Handy Yunianto, bonds analyst at Mandiri Sekuritas, expects that Indonesian nasi goreng bonds will appeal to foreign investors. Moreover, these investors are presumably already used to the currency risk considering many foreign investors invested in Indonesian state bonds (SUN). However, different to state bonds, nasi goreng bonds carry a higher credit risk as well as a higher liquidity risk. Therefore, Yunianto advises that the first nasi goreng bond issuance should be conducted by a company with a strong credit rating. If the pilot project would somehow fail, then it can take plenty of time to re-earn foreign confidence in Indonesia's nasi goreng bonds.