PT Pertamina may tap local bond market next year

State-owned oil and gas company PT Pertamina is considering to sell rupiah-denominated bonds in the domestic market next year after dropping an earlier plan to issue global bonds this year, Bisnis Indonesia newspaper reported on Thursday.

It is also mulling to borrow from banks. Both the actions are needed to finance its capital expenditure of US$600 million in 2004.

?For external financing, we are considering both the schemes of issuing rupiah bonds and bank borrowings,? Pertamina?s finance director Alfred Rohimone said at the House of Representatives in Jakarta on Wednesday.

He, however, wasn't able to provide an indication of the size of such a bond if the company goes ahead.

"There is still a lot of cash in the domestic market available to us," Alfred said.

He added that a dollar bond is "riskier than a rupiah (bond) although a dollar bond pays a lower coupon." That was why Pertamina's new management, which stepped into power in October, scrapped the former management's plan to issue $500 million bonds, he said.

The company is also seeking loans from local banks, such as PT Bank Mandiri, PT Bank Negara Indonesia and PT Bank Central Asia to help finance capital expenditures of $600 million next year.

Pertamina plans to spend $3 billion in the next five years to expand its business, which it will fund through loans and bonds, he said. (*)