PGN delays Rp 1.5 trillion bond sale

Indonesian state gas distribution company PT Perusahaan Gas Negara is delaying its planned Rp 1.5 trillion bond issue because rising local interest rates are making it too costly, the Dow Jones Newswires reported on Friday citing a company official as saying.

The company had expected to sell the bond in the first quarter of the year but it is now unclear when, or indeed if, the sale will go ahead.

The bond proceeds were to be used to finance a pipeline project from South Sumatra to West Java and the company may now look to the local government to help fund the pipeline.

"It's possible there could be a joint venture with the local government owning the pipeline and us doing the distribution," the official said.

PGN is also seeking to revise a covenant it has with the World Bank of a 70%-30% debt-to-equity ratio because it would like to raise more debt to finance other projects.

Senior officials met with the international body at the turn of the year and are expected to go to Washington to discuss the issue again in early May.

PGN may seek a 80%-20% or 85%-15% balance, the official said (*)