Company Anticipate Rupiah Depreciation. Rupiah exchange rate against the USD is still in the range of IDR 16,000/USD. Referring to Bank Indonesia (BI) data, Monday (6/4), rupiah exchange rate is at IDR 16,556/USD. If the company receives income in rupiah but has a debt burden denominated in USD, the current condition can certainly be a problem for the company.
Take for example, Lippo Karawaci Tbk (LPKR IJ). This year, LPKR has twice released bonds denominated in USD. In January 2020, Lippo Karawaci issued bonds worth USD 325 million which will mature in 2025. Then, LPKR issued a tap issue of the bonds amounting to USD 95 million. All funds were used by Lippo Karawaci to pay bonds maturing in 2022.
Lippo Karawaci CEO John Riady said that his party had taken preventative measures so that the impact of the weakening of the rupiah could be handle properly. Lippo Karawaci currently holds all of its cash in denominations of USD and SGD with a total value of IDR 3.5 trillion. In addition, Lippo Karawaci has hedged up to IDR 17,500/USD.
Besides, Lippo Karawaci also has no debt that must be paid off immediately until 2025 with the issuance of bonds this year. John Riady state, Lippo Karawaci had reduce debt in 2019 so that the net debt to equity ratio (DER) was 21% or the lowest in the industry. Beyond that, the next debt maturity in 2025, add John.
Looking at the financial statements of 3Q19, debt bonds that have been repaid are bonds issue by Theta Capital subsidiary and will mature in 2020. Theta Capital issues bonds twice amounting to USD 150 million and USD 260 million with fixed interest 7%. Of the total USD 410 million, as much as USD 149.3 million was paid out in March 2019, leaving USD 260 million. However, Lippo Karawaci still has a total interest expense of USD 19.75 million.
Running hedging. The optimism tone was express by the Director of Corporate Communications and Investor Relations of Gajah Tunggal Tbk (GJTL IJ) Catharina Widjaja. She believes his company is able to reduce the negative impact of the weakening of the rupiah with hedging that has been run and natural hedging of export earnings.
Hedging has been carry out in a principal payment scheme for a syndicate loan. The company also produces export revenues in USD, which reduces the negative impact of the strengthening USD, add Catharina Widjaja. She add, Gajah Tunggal tried to minimize the risk of weakening the macroeconomic by increasing efficiency in the production process.
Gajah Tunggal also does not have a large expansion plan that requires huge funding. But according to Moody’s notes, from Gajah Tunggal long-term debt as of 30 September 2019 valued at USD 397 million, only USD 184 million was hedge. The hedging only protects the principal up to a limit of IDR 14,811/USD while debt interest costs do not receive hedging.
Gajah Tunggal is also very dependent on short-term working capital loans, most of which will mature in August 2020. Unstable capital markets, exacerbate the risk of refinancing on these loans. While Director of Medco Energi Internasional Tbk (MEDC IJ) Hilmi Panigoro said, Medco insist it would remain cautious.
One of them is reviewing expenditure plans without compromising work safety and the environment. As for the 3Q19 financial statements, Medco Energi was record to have cash and cash equivalents at the end of the period of USD 313.85 million. Meanwhile, Medco’s total debt was record at USD 4.85 billion.
Of this amount, the issuer’s short-term debt was record at USD 1.06 billion. Hilmi Panigoro said that his party had cash of more than USD 1 billion. The funds are sufficient to pay obligations and pay debts for the next three years. So Medco Energi is in a strong position in the middle of this storm and Moody’s recognizes that, Hilmi said.