PT PP to Issue Perpetual Bonds to Ease Balance Sheet

State-owned contractor PP, Tbk (PTPP IJ) is preparing for the issuance of perpetual bonds, to strengthen its capital amid robust demand for infrastructure construction in the next few years. The perpetual bonds will have no maturity period but a call option. Once issued, the bonds will be bought by limited participation mutual fund (RDPT) issuers whose products will be purchased by investors. Despite the uncertainty, several insurers and pension fund managers have conveyed their intention to buy the bonds, fueling the firm’s optimism that the bonds will be warmly welcomed. The bonds issuance was aimed at relaxing its balance sheet, enabling the firm to raise its leverage, instead of supporting its financing needs, of which the shortage currently stand at IDR1trn (USD75mn) to IDR2trn this year. PP has earmarked IDR21.8trn in capital expenditure this year for expansion.

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