JAKARTA: The Federal International Finance (FIF) Group, the motorcycle financing unit of diversified conglomerate Astra International Indonesia, expects to raise up to Rp 1.5 trillion (US$108.5 million) from the issuance of serial bonds next month.
“We are looking for the best source of funding with the current condition. Issuing bonds is one of the best ways,” FIF Group head of treasury and funding Jerry Fandy told The Jakarta Post recently.
The bonds, which will be offered to the public early next month, will be the second phase of its Rp 10 trillion bond program, which will run next year. The company raised about Rp 3 trillion during the first issuance in March.
The company has appointed PT CIMB Securities, PT Indo Premier Securities, PT DBS Vickers Securities, PT Mandiri Sekuritas and PT Standard Chartered Securities Indonesia as underwriters for the bond issuance.
The upcoming bond offering will consist of two series of debt papers. Series A will offer an 8.5 percent coupon rate and will have a maturity of a year, while Series B will offer a coupon of 9.25 percent and will mature in three years.
The company relied on obligations to fund the company’s automotive financing, other than bank loans.
Jerry said that the bond issuance would be the last offering this year due to lower-than-expected motorcycle sales. Indonesia’s economic slowdown in the second half of this year has severely affected the sales of new motorcycles.
Sales of motorcycles in the second quarter totaled only 3.2 million units or a 23 percent drop from the same period last year at 4.2 million units, according to Indonesian Motorcycle Industry Association (AISI) data.
The association has also revised down the national motorcycles sales target to 6.5 million units this year from the initial target of 7.7 million units due to the sluggish market.
FIF Group lowered its initial target of providing Rp 30 trillion for motorcycle purchase financing this year.
However, the company still recorded 8.8 percent growth in outstanding loans in the first half of the year to Rp 13.6 trillion from Rp 12.5 trillion in the same period last year.
Its profit also grew 10 percent to Rp 660 billion in the first half from Rp 600 billion in the same period last year.
Jerry said he was optimistic that the company would still net profits this year despite the sluggish market.
“So far we haven’t seen any positive factors that could boost sales, as motorcycle sales slumped. […] I think it would be similar to the first half of the year,” he said.
FIF Group is the country’s largest motorcycle financing company, dominating 46.2 percent of the country’s market. Its assets stood at Rp 25.37 trillion last year.
