Sofyan Basir, President Director of Perusahaan Listrik Negara, said the company is in need of new funds to finance its role in the government's ambitious 35,000 MW power program as well as part of the company's 2018 operational costs, estimated at a total of USD $5 billion. He added that with PLN's assets currently estimated at IDR 1,300 trillion (approx. USD $97 billion), the targeted USD $2 billion rupiah-denominated global bond issuance is not "too big".

A month ago state-owned toll road operator Jasa Marga was the first Indonesian company to issue 'komodo' bonds (rupiah-denominated global bonds), listed at the London Stock Exchange on 13 December 2017. It issued IDR 4 trillion (approx. USD $299 million) worth of three-year bonds with a 7.5 percent coupon rate. Jasa Marga's 'komodo' bonds were a success. Total investor demand in fact reached IDR 15 trillion (approx. USD $1.1 billion), attracted by the high yield.

Despite being a rupiah-denominated bond, bond holders will receive the interest and full amount back in US dollars (using the rupiah-US dollar exchange rate at the time of payment).

Previously, Indonesian corporations had been used to selling US dollar-denominated bonds abroad. However, 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 shifts the currency risk to the foreign investor. Hence, investors' confidence in the Indonesian rupiah is key. Indeed, the rupiah has been stable against the US dollar since the fourth quarter of 2017 and strengthened sharply against the greenback since mid-December.

Meanwhile, the Indonesian government is encouraging state-controlled companies to find alternative financing solutions for national infrastructure projects as there are funding constraints at home and limited financing commitments from local banks.

Indonesian Rupiah versus US Dollar (JISDOR):

| Source: Bank Indonesia