Rupiah slump sends Indonesian borrowers back home

Singapore

THE double whammy of a slumping currency and rising hedging costs is denting the appeal of overseas financing for Indonesian borrowers.

Telecom operator Indosat turned to the local rupiah market on Thursday to refinance its US dollar debt. Its move comes as Indonesia is pressuring local companies to rein in their foreign currency liabilities, and bankers expect more local companies to follow suit.

"It has always been cheaper to fund in rupiah than in the offshore bond market," said a local head of debt capital markets. "With the government trying to put a halt to more companies seeking offshore debt, local companies will have to get more creative and start tapping the local market."

Indosat, which earns all its revenues in Indonesian rupiah, has priced a 3.1 trillion rupiah (S$316 million) multi-tranche bond that will go towards the repayment of a US$650 million bond due in 202…