Lack Of Corporate Bonds Due To The Impact Of The COVID-19 Pandemic

Illustration. (Photo: Pefindo)

JAKARTA - The COVID-19 pandemic that has occurred since March and the uncertainty when it will end has had a negative impact on various sectors. One of the impacts is to make corporate bonds this year lower than last year.

The Indonesian Securities Rating Agency (Pefindo) noted that the number of corporate bond issuers has decreased in line with the slowing growth of corporate bonds due to the COVID-19 pandemic. As of the first semester of 2020 alone, the issuance of listed debt securities has only reached Rp. 29.28 trillion, lower than the same period in the previous year which reached Rp. 53.32 trillion.

Pefindo President Director Salyadi Saputra said that amidst the increasing economic uncertainty, his party has prepared three projected scenarios for the issuance of corporate debt securities this year.

"Usually we estimate only one word, now we can't. We estimate three words (pessimistic, moderate and optimistic) because it is difficult to predict," he said, in a virtual discussion, Friday, July 10.

First, the pessimistic scenario, Pefindo estimates that the issuance of corporate bonds in the July to December 2020 period will increase by 25 percent of the total mandate that has been pocketed as of June 30, 2020.

Furthermore, Salyadi said, in this scenario, the total corporate bond issuance in 2020 could reach IDR 60 trillion to IDR 70 trillion.

Furthermore, the moderate scenario in which the increase in emissions in the second semester of 2020 is estimated to be 50 percent of the total mandate or an increase that is almost the same as in the first semester of 2020, so that the total emissions this year is estimated to reach IDR 80 trillion.

The last one is a positive scenario in which corporate debt securities issuance this year will reach as much as IDR 100 trillion.

Salyadi said, if the optimistic scenario is realized at Rp. 100 trillion, the revenue will decrease from the realization of the issuance in 2019 which reached Rp. 146.5 trillion.

As for June 30, 2020, Pefindo has received the mandate to issue corporate bonds worth IDR74.16 trillion. In terms of sector, this mandate is dominated by the banking sector at 13.48 percent, financing by 11.87 percent, and toll roads by 10.59 percent.

However, Salyadi acknowledged that it would be difficult for all of these values to be realized towards the end of the year given the immeasurable pressure from the spread of COVID-19. Moreover, the realization of new bond issuance reached IDR 30.03 trillion or decreased 42.8 percent from the IDR 52.5 trillion achievement in the same period last year.

Salyadi said, due to the COVID-19 condition, Pefindo lowered the estimate for the issuance of corporate debt securities in 2020 at least 30 percent from the initial projection of IDR 158.5 trillion due to concerns about the impact of COVID-19.

"Initially, the prediction was quite high because we were sure that there was IDR 130.7 trillion due and there might be refinancing . But the reality is that now if conditions are not conducive, one solution for corporations is to return to banking," he said.