Bank Jateng Officially Distributes Short-Term Debt Securities, High Investor Enthusiasm

PT Bank Pembangunan Daerah Jawa Tengah (Bank Jateng) officially distributes short-term debt securities in the form of Bank Jateng Negotiable Certificate of Deposit (NCD) in 2018 1 trillion in totalling. This NCD consists of two series, namely A Series worth 970 billion with 6 months with 8.50 percent tenor, and B Series valued at 30 billion with 1-year tenor of 8.65 coupon percent.

From the planned of 1 trillion NCDs number to be issued, Bank Jateng noted excess demand or oversubscribed at 1.2 times, due to the high interest and enthusiasm Bank Jateng NCD investors. Issuance in 2018 is the largest number of NCDs issued in Indonesia in one stage issued by Bank Pembangunan Daerah (BPD).

Bank Jateng NCD excess demand in 2018 is an achievement in itself considering noted when banking liquidity tightened at the end of 2018. Previously the Deposit Insurance Agency (LPS) predicted the risk of tightening banking liquidity until the end of 2018.

This is indicated by the high credit growth 12.69% on an annual basis (yoy) in September 2018. Meanwhile, in the same period, third party funds only grew 6.6%. Credit growth rose again in September reaffirmed the continued growth pattern from the previous month therefore the industry’s loan to deposit ratio (LDR) rose to 93.39%.

Bank Jateng Finance Director, Dwi Agus Pramudya said Bank Jateng NCD success of issuance in 2018 was a combination of the timing success and pricing strategy had been prepared by Bank Jateng before as well as investor confidence in Bank Jateng’s creditworthiness, which was rated idAA- (Double A Minus); Stable Outlook).

Bank Jateng issued this NCD just before Bank Indonesia announced an increase in the BI-7DRRR Reference Rate, therefore Bank Jateng could reduce interest rates. Bank Indonesia (BI) through the Board of Governors’ Meeting (RDG) on 14-15 November 2018 decided to raise the Reference Rate of BI 7-Days Reverse Repo Rate (BI-7DRRR) by 25 basis points (bps) to 6.0%.

Acting as joint arranger regulator is Danareksa Sekuritas, Mandiri Sekuritas, BNI Securitas, BCA Securitas and Trimegah Securities. Issuance through electronic distribution was carried out on November 21, 2018. This NCD issuance fund will be used to maintain Bank Jateng’s short-term liquidity needs until the end of this year. The NCD plays an important role as one of the funding sources for banks in addition to deposits and other debt securities therefore in the end the bank has a large liquidity space to boost performance through lending.