Trauma Fails To Pay Issuer Bonds, Investors Are Asked To Be Careful With PGEO's Global Bonds

JAKARTA - Investors are asked to be careful of the refinancing of PT Pertamina Geothermal Energy Tbk (PGEO) through the issuance of bonds following the risk of default and debt settlement commitment.

Associate Director Fixed Income Awardah Sekuritas Ramdhan Ario Marosto said the abundant liquidity in the bond market did not reduce investor caution in choosing an investment portfolio in debt securities instruments.

According to him, the case of bond interest failure that befell a number of issuers recently will be a negative sentiment for the issuance of PGEO green bonds due to the company's status which is also a subsidiary of a state-owned company, namely Pertamina.

"Even though it's not up to default, this disrupts investor confidence. For that, information disclosure from regulators and companies is needed," he told reporters, Tuesday, May 2.

In addition, Ramdhan continued, the BBB rating from the international rating agency Fitch Ratings for PGEO green bonds is considered too risky for investors. The reason is, the BBB rating is the lowest investment feasibility rate.

"This is too risky, so the company must prove that they have a good commitment to settle their debts," he said.

From the corporate side, said Ramdhan, PGEO must bear a higher interest rate in the issuance of its initial foreign debt securities, especially since the proceeds from bonds will be used to pay debts again, aka refinancing.

"If you don't have a history to release debt securities, what must be borne is that the cost of funds must be higher," he said.

On the other hand, said Ramdhan, PGEO's commitment to settle PGEO's debts has not been tested in the market so that market participants will be more careful.

"That's why issuers who have routinely issued bonds and have good records in the market will be easier for investors to accept," he concluded.