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Indonesia state-owned agribusiness company issues maiden sukuk

JAKARTA – Indonesia’s state-owned agribusiness, pharmaceutical and medical devices supplier PT Rajawali Nusantara Indonesia (RNI) tapped the sukuk market for the first time, raising 200 billion Indonesian rupiah ($14.993 million) through a sale of sukuk ijarah, Yana Aditya, its finance director told reporters in Jakarta yesterday.

RNI has previously relied on conventional bank financing and sales of medium term notes (MTN).

The single tranche three-year sukuk was priced at 10 percent and was 2.4 times over-subscribed, generating orders of 475 billion rupiah, according to Aditya.

RNI will use proceeds from the sukuk to finance working capital, and increase the capacity of its pharmaceutical and medical equipment plants.

It also intends to beef up its stock of machinery to increase its sugar production to 316,000 tonnes this year from 283,000 tonnnes last year in its factory in Surabaya, West Java.

The company plans to disburse capital expenditure worth 1.1 billion rupiah this year. Of this, financing will come from internal cashflow and the rest from MTNs, bank loans, as well as proceeds from its maiden sukuk.

RNI’s sukuk received an investment grade rating of ‘idA-‘ with a stable outlook from local rating agency Pefindo.

Indonesia's corporate sukuk outstanding from 2012 to May 2017 stood at 14.6 trillion rupiah from the sale of 65 tranches, according to the Financial Services Authority (OJK). This represents 4.4 percent of the 326.8 trillion rupiah corporate bonds for the same period. These sukuk were issued by 16 corporates.

($1 = 13,329 Indonesia rupiah)

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