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Superblocks developed by Agung Podomoro in Jakarta. (Reuters Photo/Supri)

Agung Podomoro Land, one of Indonesia’s largest property developers, plans to sell bonds later this month, raising funds to refinance its debt and fund project
acquisition.

Cezar dela Cruz, finance director of Agung Podomoro, told reporters in Jakarta on Wednesday that the company plans to sell “at least” Rp 1 trillion ($103 million) of bonds by the end of May. He said that this sale will be part of a bigger bond sale to be completed in two years.

“The bond issuance will be used to refinance some of our bank loan, our maturing bond and some for [project] acquisitions,” he said, after the company’s shareholders meeting on Wednesday. No details of the bond sale including the coupon and tenor were provided on Wednesday.

Indra Wijaya, vice president director at Agung Podomoro, said that the company is now in negotiations to acquire property projects in Kelapa Gading and Buaran in
East Jakarta, and in Medan, North Sumatra.

“We are also looking to enter cities that we have never been in, such as Surabaya, Solo and Yogyakarta,” Indra said, adding that the company has sent out teams to those cities to assess conditions there. However, he did not reveal the value of investment for these acquisitions.

This year alone the company is budgeting Rp 4.5 trillion in capital expenditure for its existing projects such as the Simprug project, its residential and apartment complex in Batam, and apartment project in Balikpapan. Agung Podomoro will also start selling units on these projects within the year.

The company remains optimistic about the property market in Indonesia with the middle class boosting demand.

“The middle segment of the market remains strong, so as long as the interest rate is kept as [low] as it is now, the market will remain positive,” he said.

Bank Indonesia has kept its benchmark interest rate at record low of 5.75 percent since February 2012.

Indra said that penetration of mortgage in the country is still very low at 3 percent of the country’s gross domestic product, while in comparison, Taiwan’s mortgage is 56 percent of its GDP.

This year, Agung Podomoro is targeting a 10 percent increase in its net income to Rp 811.73 billion and a 15 percent rise in revenue to Rp 4.69 trillion from last year’s figures.

Its shares rose 1 percent to Rp 485 on the Indonesia Stock Exchange on Wednesday.

Source: http://www.thejakartaglobe.com/business/agung-podomoro-to-sell-bonds/