While competition has become increasingly fierce on the domestic bond market, two of Indonesia's state-controlled companies - but listed on the Indonesia Stock Exchange - are studying plans to sell rupiah-denominated corporate bonds on the global market (so-called nasi goreng bonds, a reference to the famous Indonesian fried rice dish). The two companies that are studying these plans are toll road developer and operator Jasa Marga and construction company Wijaya Karya.
Recently, domestic demand for rupiah-denominated corporate bonds has declined - hence competition has increased - and therefore local companies have become eager to tap the international market, especially state-controlled firms for infrastructure-related plans (as Indonesian President Joko Widodo has shown his commitment to boost infrastructure development across Indonesia). While there are plenty of Indonesian companies that sell US dollar-denominated global bonds, there always looms a currency risk for the issuer. A nasi goreng bond would shift the currency risk to the foreign investor.
Although the Indonesian rupiah has been very stable since February 2017, this performance is actually an anomaly. Historically, the rupiah tends to show highly volatile behavior.
Jasa Marga plans to sell USD $200 - 300 million worth of nasi goreng (nasgor) bonds. Jasa Marga Finance Director Donny Arsal said the company has already organized a non-deal roadshow related to the issuance. However, he added that Jasa Marga is still studying the plan internally. Still, investor appetite seems good and therefore there is a serious chance Jasa Marga will sell its nasgor bonds before the end of 2017.
Funds generated through the nasgor bond sale would be used to finance further progress of Jasa Marga's existing toll road projects. Jasa Marga is currently engaged in 18 projects (two of which have just been completed). However, Arsal informed that there has not been made a decision on the specific projects yet that receive funds from the bond sale. This is also still being studied.
The toll road operator is estimated to require a total of IDR 5 trillion (approx. USD $376 million) for the projects. Bonds and bank loans are the two main strategies to collect the funds.
Meanwhile, Wijaya Karya (Wika) is also studying opportunities to sell the rupiah-denominated bonds on the global market as an instrument to collect funds for business expansion. However, Finance Director Steve Kosasih said the company will first need to check what credit rating the company is given.