Bonds of Indonesian cement manufacturer Semen Indonesia are subscribed 1.3 times. Semen Indonesia Finance Director Darmawan Junaidi said the company planned to sell IDR 3 trillion worth of five-year bonds (8.6 percent coupon), but demand reached IDR 4 trillion. Most demand originated from domestic financial institutions such as banks, insurance and pension funds.
The five-year bonds of Semen Indonesia were rated idAA by credit rating agency Pefindo. Underwriters for the sale were Bahana Sekuritas, Danareksa Sekuritas, and Mandiri Sekuritas.
Funds generated through the bond sale (which forms the first phase of the sale) are to be used to refinance debts of its subsidiary Semen Tonasa (about IDR 1.37 trillion) and for working capital related to the production, distribution, sales and marketing of its cement products. Semen Tonasa's debt, which is being settled through the bond sale, stems from loans that were taken up to build the Tonasa V plant and power station in South Sulawesi.
The bond sale of Semen Indonesia is regarded to have a positive impact on the long-term financial performance of Indonesia's largest cement producer as the coupon rate is lower compared to interest rates paid for bank credit.
Sales of Semen Indonesia have been solid so far in 2017. In the first five months of the year its revenue rose 10 percent (y/y) to 11.5 million tons of cement. This is a good performance considering the ongoing fierce competition in Indonesia's cement sector amid the structural oversupply situation. Growth of sales so far this year was attributed to retail sales, and not so much to big projects.
Semen Indonesia controls about 43 percent of the domestic cement market.