PLN to sell more islamic bonds later this year

State utility PT Perusahaan Listrik Negara (PLN) may sell Islamic bonds by the end of October after meeting investors in the Middle East and Asia, a company official said, The Jakarta Post reported Thursday.

?We need the money as soon as the contracts are signed? with winning bidders who will construct 10 power plants across Java, Djuanda Nugraha Ibrahim, acting president director of the Jakarta-based company, said in an interview Tuesday.

The sale will be the second offering of Islamic securities by PLN this year and the second-biggest after DP World, the Dubai-owned port company, sold $3.5 billion of debt in January.

Islamic bonds follow the religious principles that ban interest payment. PLN plans to meet potential investors in the Middle East, U.S., Europe and Asia, Ibrahim said.

Issuers are trying to take advantage of the growing popularity of Islamic debt among the world?s 1.5 billion Muslims and investors seeking diversification.

Companies and governments in the Middle East and Asia have introduced Islamic stock indexes and funds to attract an estimated $300 billion of assets held by Islamic mutual funds worldwide.

The utility in July said it plans to sell about $1 billion of Islamic bonds this year to boost power generation. PLN will need less than $9 billion to build power plants to supply an additional 10,000 megawatts of coal-fired capacity by 2009, Ibrahim said. It will finance 15 percent of the project.

UBS AG, Switzerland?s largest bank, Dubai Islamic Bank and Jakarta-based PT Danareksa will help sell the bonds.(*)