Losses And Uncertainty Of Absorption Of PGE's Business Implementation

JAKARTA - A number of issues related to PT Pertamina Geothermal Energy Tbk (PGEO) in the plan to issue green-minded debt securities aka green bonds that will be used to pay debts back (refinancing).

Fundamental Analyst of PT Kanaka Hita Solvera Raditya Krisna Pradana said there are at least two risks that PGE will face in this corporate action. First, the company will face uncertainty whether the bonds offered have been successfully absorbed or not.

The reason, said Raditya, is that the amount of funding needs to be obtained from the issuance of these bonds is quite large, namely US$400 million or around Rp6 trillion. Not to mention that the funds must be obtained in a short time.

"It will be short because it will be used as debt refinancing which will mature in June this year, only about one month," he told reporters, quoted Wednesday, April 26.

Second, continued Raditya, PGEO will find it difficult to get lower bond coupons compared to the previous loan interest rate. Given the current global economic condition which is full of liquidity challenges.

If calculated, referring to the LIBOR rate of 3 months 2021, it is only around 0.16% and the largest margin added to the facility agreement as of June 23, 2021, is 0.7 percent, then PGEO's loan interest at that time was not more than 3 percent. Meanwhile, the green bonds coupon interest that will be released this time is 5.15% per year.

The interest expense imposed on the agreement at the time was LIBOR 3 months plus margin and paid at the end of the interest period, where the margin for the month 1-12 was around 0.5 percent for the offshore and 0.6 percent for the offshore. While the margin for the month 19-24 is around 0.6-0.7 percent.

"If the bond coupon that will be used to pay off the debt is greater than the interest of the debt itself, you could say PGEO lost in this global bond issuance," he said.

In the information disclosure of the Indonesia Stock Exchange (IDX), PGEO announced plans to issue green bonds outside Indonesia amounting to 400 million US dollars or around Rp. 6 trillion. The coupon in this bond is 5.15 percent per year due in 2028.

The company is indeed pursuing jumbo funds to pay the remaining debt of around Rp. 6 trillion in credit facilities in the form of a bridge loan which will soon mature in the near future. This credit facility was released in June 2021 with PT Bank Mandiri (Persero) Tbk (BMRI) as a facility agent.