MANILA – Asset-backed securitization will play an important role in plugging the financing gap to build vital infrastructure in Indonesia. With the success of recent deals by toll-road operator Jasa Marga and electricity utility Perusahaan Listrik Negara, others are set to follow suit.
In conversation with The Asset following a panel session as part of the 51st annual meeting of the Asian Development Bank, Suahasil Nazara, chairman of the fiscal policy office and deputy minister of finance, Indonesia, explains that out of the ambitious US$350 billion infrastructure projects through 2019, only 40% can be fulfilled by the government budget directly.
State-owned enterprises (SOEs) are expected to provide another around 20% of the financing needs. “The way they get money is either through the issuance of bonds or capital injection from the government,” he shares. “On the other hand, these SOEs are sitting on huge amounts of assets. We see asset recycling via securitization could provide another way to raise finance by securitizing their future income stream.”
He says that asset securitization can be viewed as a new business model. “Hopefully, more and more can follow through. I think the amount that can be raised should be big as SOEs’ assets are in the hundreds of billions of dollars of assets.
However, he cautions that SOEs will still need to be careful when securitizing existing assets. “They need to be more comfortable with the structure,” he adds. Right now, Suahasil says securitizations completed are in the local currency but foreign investor participation is very much welcome. SOEs, for example, have also issued rupiah-denominated bonds, otherwise known as Komodo bonds, in London. “These bonds are attracting foreign investors into Indonesia’s infrastructure development.”
