PGN may increase size of bond issue due to strong demand
Monday, February 9 2004 - 01:36 AM WIB
“Having seen the demand from the investors, PGN will increase the size of the bond issue but the final figure will be announced after the completion of roadshow, “ PGN commissioner Sumarno Surono said in Jakarta over the weekend.
The roadshow in Hong Kong and Singapore, according to Sumarno, indicated that there is a huge demand for PGN’s bond. However, he declined to mention the total value of the orders.
He is confident that the PGN bond, which provides 7.375%-7.5% yield is attractive given the stagnant interest rate in the U.S.
Sumarno explained that his company earlier planned for the issuance of up to $500 million bond to finance the construction of gas pipeline.
“Last year, PGN got the permission from its board of commissioners to issue $250 million bonds, but the company just issued only $150 million with a 7.75% yield, less than the planned $250 million,” he added.
“If PGN issues more than $150 million bond this time, it is in line with the commissioners’ approval.
The sale could be helped by Standard & Poor's late January upgrade of the company's long-term foreign currency rating to B+ from B.
The investor presentations kicked off in Hong Kong on last Monday, and took in Singapore, New York and Boston and will conclude in London on Monday. Pricing is expected on Wednesday.
Meanwhile, a bond investor said the PGN’s bond issue may not be as smooth as expected by the company’s management. Because, the present bond’s yield is lower than the earlier bond so investors prefer to buy PGN’s bond on the secondary market. (*)