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Indonesian finance firm eyes Islamic bond offering in Malaysia

Publication Date : 02-07-2014

 

PT Adira Dinamika Multi Finance, a major financing firm in Indonesia and the automotive financing arm of private lender Bank Danamon, plans to raise funds by offering sukuk, or Islamic bonds, in Malaysia in the second half of the year.

The sukuk will be Adira’s first attempt at selling debt paper overseas, according to Adira president director Willy Suwandi Dharma.

“We are exploring the possibility of offering the ringgit-denominated sukuk in Malaysia. Hopefully we can realise the plan in the second half,” he said recently.

Adira is currently holding talks with Malaysia-based underwriters to determine the value of the debt paper to be offered and their coupons.

Funds generated from the sukuk will be used to meet Adira’s remaining financing needs for the second half. The company, Willy said, was still in need of about 500 billion rupiah (US$42.38 million).

“The debt paper’s value will be less than 500 billion rupiah because sukuk is only one way to meet the needs. We will use other channels as well, including the issuance of bonds domestically,” he added.

Adira is allowed to issue between 2 trillion and 2.5 trillion rupiah worth of bonds as part of its continuous bonds offering. It has already issued 1.5 trillion rupiah worth of bonds in May and is looking to carry out another bonds issuance in the third quarter.

The firm is also expecting to seal a deal with lender Commonwealth Indonesia to jointly finance automotive purchases.

Adira previously relied heavily on Danamon as its parent company for funding and joint financing. However, that led to Danamon suffering from a high loan-to-deposit ratio (LDR).

Following Adira’s venture into other funding channels, Danamon has been able to reduce its LDR and portion within the joint financing segment.

According to statistics, 78 per cent of Adira’s loans were jointly financed by itself and Danamon in 2010 but, three years later, the joint loan figure had come down to 39 per cent.

Meanwhile, Willy said the company was aiming to boost its sharia financing portfolio to around 1 trillion rupiah by the end of 2014. Its latest data, which ended in May, shows that the sharia financing amounted to 657 billion rupiah, equal to 5 per cent of Adira’s total financing.

As much as 98 per cent of the sharia loans went to the motorcycle ssegment and the rest to the car segment of the market.

“We have seen an uptick in the financing booking, approaching Idul Fitri. Each segment has recorded a 5 to 10 per cent increase from the previous month,” Willy said.

US$1:11,862 rupiah

 

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