Indonesia bond defaults

Bond defaults thus far for Indonesian companies:

2015: PT Berau Coal Energy, PT Trikomsel
2014: PT Bumi Resources


Indonesian phone retailer PT Trikomsel Oke's Singapore-dollar bonds plunged to record lows last week after it blamed a weak rupiah. It is unable to service its debt and needs to restructure.

Airlines to expect rise in profit with drop in oil prices

As crude oil prices continue to drop, one group of companies appear to be the winners. Most airlines can expect to make a larger profit this year, thanks to the drop in oil prices.

IATA, the Geneva-based group that represents 240 airlines or what comprises 84 percent of air traffic, has given its forecast that 2015 profits for airlines should reach $25 billion even though profit margins will continue to stay tight at around 3 percent.

Good news for Garuda?

Garuda to launch three new routes from Ambon

Garuda Indonesia plans to launch 3 new routes connecting Ambon in Maluku to three other cities in Maluku and North Maluku Islands in order to enhance its network in eastern Indonesia.

The Indonesia airline carrier will be linking Ambon with Langgur, Saumlaki and Ternate using a French Italian turboprop plane ATR 72-600 that has a passenger capacity of 70.  Each route will fly daily.

With the new flight services,  people would be connected to major cities in the archipelago.  A Garuda spokesperson indicated that this was in line with efforts to help the government create new economic centres in remote areas.

Just recently, Garuda announced that it has signed a code-share agreement with Myanmar Airways.

Garuda's stock price closed at 540IDR, up almost 10.20%.

Tower Operators Take Advantage of Low Interest Rates to Refinance Debts

Indonesia's tower operators are taking the opportunity to refinance their debts to avoid the rising interest rates that will likely increase over the next one year or so.

The three tower operators carrying out the refinancing are PT Tower Bersama Group, PT Sarana Menara Nusantara, and PT Solusi Tunas Pratama.

Tower Bersama announced that it had secured US$1.3 billion in new loans, involving $1 billion unsecured term revolving credit facilities and an additional $300million unsecured term credit facility.  Banks involved are ANZ, Bank of Tokyo Mitsubishi UFJ, BNP Paribas, CIMB Bank and CTBC Bank.

$900 million will be used to refinance its $2 billion syndicated loan while the remaining $400 million will be used for capex.

Garuda signs code-share agreement with Myanmar Airways

Indonesia's flagship carrier, Garuda Indonesia, has signed a code-share agreement with Myanmar Airways.  Myanmar (or Burma) is located to the west of Thailand, bordering Bangladesh, India, China and Laos.  The code-share agreement will enhance Garuda's network in Southeast Asia and also help to encourage further economic activity between Indonesia and Myanmar.

The code-share agreement means both carriers will connect passengers between Jakarta and Yangon through their hubs in Singapore and Bangkok respectively.  The collaboration will start next month.

Around 55,000 passengers travel between Indonesia and Myanmar each year for business and pleasure.

The potential of Myanmar as a market for Garuda is also promising given that it is slowly opening up its economy. Myanmar has been slowly opening up to the world.  Myanmar's new stock exchange, the Yangon Stock Exchange, will replace the Myanmar Securities Exchange Centre (MSEC) and is set to launch in October 2015 with three companies listed.

Blue Bird IPO raises $200 million

Indonesia's top taxi operator, Blue Bird, raised almost Rp2.4 trillion ($200 million) in its initial public offering.  The amount raised was less than what was initially expected after Blue Bird had to contend with the weak market conditions.

This was its second attempt at IPO after its initial attempt in 2013 failed after regulatory approval was delayed due to a lawsuit against Blue Bird's President Director Purnomo Prawiro over share ownership and trademarks.  This was a family dispute and Noni Purnomo believes that it is entirely a family dispute which should not disturb the company.  A district court rejected the lawsuit in February, paving the way for the IPO to take place.

Blue Bird was founded by Noni's grandmother in 1972 and is named after a French fairy tale about a girl and a blue bird who worked tirelessly in search of happiness.  The company now owns a around 30,000 strong fleet of taxis and is reputable and known for being clean and reliable.

The company still has room to grow.  While Singapore has 5.3 taxis per 1000 residents, Jakarta has only 1.4 taxis per 1000 residents.  With a growing middle class and the opening of Indonesia's economy to foreign investors, there is certainly room for growth.

The company plans to add to its total fleet by 20% each year.  Its fleet of taxis is also far larger than its closest competitor, PT Express Transindo Utama (Express Group), which operates only 10,000 taxis.

Blue Bird is now listed on the Indonesia Stock Exchange (IDX) with ticker code "BIRD".  The IPO price was Rp6,500.

Tower Bersama Infrastructure looking for US$1 billion financing

Tower Bersama Infrastructure (stock code: TBIG) which is publicly listed on the Indonesia Stock Exchange has been reported to be looking for US$1 billion in multi-tenor financing.  Reuters has reported that the Tower Bersama has approached its existing lenders for financing. Tower Bersama has not confirmed or deny the report.

This comes months after the company had secured a $300 million loan facility in July 2014.  The earlier $300 million facility was sought to refinance the company's outstanding debts as well as to support its organic growth.

Tower Bersama has seen its stock surged over 50 percent this year, easily exceeding the Jakarta Composite Index's (JCI) two digit growth this year.  A recent deal with Telkom for a swap in stake in Mitratel for Tower Bersama shares has seen Tower Bersama Indonesia's largest independent telecommunications tower provider.  Shares of Tower Bersama closed at Rp 9,050 at Friday's close.