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Treasury & Capital Markets
CGIF provides first Indonesian sukuk guarantee
Deal enables PT Polytama Propindo to diversify funding sources
Chito Santiago 10 Sep 2021

The Credit Guarantee & Investment Facility (CGIF), a trust fund established by the Asian Development Bank (ADB), provided a guarantee for a sukuk transaction for the first time for PT Polytama Propindo of Indonesia amounting to 160 billion rupiah (US$11.22 million).

The ijara sukuk offering was split in two tranches of three years and five years and also represents the first guaranteed rupiah-denominated sukuk in Indonesia. It was issued along with dual-tranche conventional senior bonds of three years and five years totalling 319.5 billion rupiah, which CGIF also guaranteed. Both issuances were made on September 8 and were both rated AAA by the local rating agency Pefindo.

Commenting on the transaction, CGIF chief executive officer Guiying Sun says the bond and sukuk offerings will certainly benefit PT Polytama in diversifying its funding sources for its growth in Indonesia’s petrochemical industry. “This is a milestone for CGIF to guarantee sukuk for the first time,” she adds. “CGIF will continue to support the development of the sukuk market in Indonesia and introduce more bond issuers in the Indonesian bond market.”

PT Polytama finance director Uray Azhari says the CGIF guarantee and the AAA rating assigned by Pefindo to both bond and sukuk enabled the company to successfully introduce its credit to a broader investor group. “This transaction has supported PT Polytama’s mission to become a leading polypropylene sector in Indonesia,” he points out. “PT Polytama is committed to making a positive contribution to the environment and continuing its support for the development of the petrochemical industry to reduce import dependency.”

Proceeds from the bond and sukuk issuances will be used to support PT Polytama’s polypropylene production in its existing plant. Indo Premier Sekuritas and Mandiri Sekuritas acted at the joint lead underwriters for the transaction.

Established in 1993, PT Polytama is a significant manufacturer of polypropylene resin in Indonesia. Its plant is located in West Java with a maximum capacity of 300,000 metric tonnes a year. It is owned 80% by PT Tuban Petrochemical Industries, a subsidiary of the state-owned Pertamina, and 20% by Pasio Investment BV.

CGIF is a multilateral facility established by the Asean members, China, Japan, Korea (Asean+3) and the ADB. Established to develop and strengthen the local currency and regional bond markets in the Asean+3 region, it seeks to provide credit enhancements, mainly in local currencies, issued by credit-worthy Asean+3-domiciled bond issuers.

The PT Polytama deal is the second from Indonesia to be guaranteed by CGIF in 2021. In January this year, it guaranteed a 583 billion rupiah offering by submarine and inland network infrastructure provider PT Ketrosden Triasmitra, enabling the company to access the debt capital market for the first time. The transaction represented the first CGIF-guaranteed rupiah bonds offered through public offering in Indonesia, setting the benchmark for future Indonesian companies looking to tap the country’s public bond market with a CGIF guarantee.

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