Property developer Bumi Serpong Damai, announced on Thursday that it was cutting its planned bond sale by a third, slashing proceeds by Rp 500 billion ($53 million), but did not offer a reason for the move.
The Jakarta-based firm, which is controlled by Sinar Mas Group, said it would try to raise Rp 1 trillion next week by selling three-, five- and seven-year bonds, down from the original Rp 1.5 trillion target.
The company will offer Rp 85 billion worth of three-year bonds at 8 percent, Rp 479 billion worth of five-year bond at 9.25 percent, and Rp 436 billion worth of seven-year bond at 9.5 percent. The debt sale is part of Bumi Serpong’s long-term plan to sell Rp 3 trillion in bonds.
The company said 29 percent of the sale proceeds would be used to finance land acquisition, while 41 percent would go toward residential houses and an office at Bumi Serpong Damai City. The remainder will be used for working capital.
The company has hired Indo Premier Securities, Mandiri Sekuritas, OSK Nusadana Securities Indonesia and Sinarmas Sekuritas to help with the sale.
The bonds will be offered to investors today and on Monday, and the planned listing on the Indonesia Stock Exchange is set for Thursday.
Many Indonesian companies have been rushing to sell bonds, hoping to capitalize on low borrowing costs in Southeast Asia’s largest economy. Bank Indonesia, the central bank, has maintained its benchmark rate at 5.75 percent in a bid to boost economic growth in the country.
The company also said it planned to spend Rp 700 billion on property projects in Surabaya, East Java, and Samarinda, East Kalimantan.
The company has secured 40 hectares of land in Surabaya and another 100 hectares in Samarinda, said Harry Budi Hartanto, the company’s president director.
Shares of Bumi Serpong rose 1.7 percent to Rp 1,170 on the Indonesia Stock Exchange on Thursday, defying negative movement in the market as a whole.
Additional reporting by Investor Daily