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Star Energy Geothermal launching green bond issuance of up to $1.11 billion

Darajat III geothermal plant, Indonesia (source: Thorndon Cook)
Alexander Richter 8 Oct 2020

Indonesian energy company Star Energy Geothermal is to issue two green bonds valued at a total of $1.1 billion to be used for capital expenditures, working capital and other needs related to geothermal operations at the plants of Darajat and Salak in Indonesia.

PT Barito Pacific Tbk (BRPT) ‘s subsidiary, Star Energy Geothermal, is certain to issue two bonds in the form of green bonds, according to a report by Kontan in Indonesia. The two green bonds to be released by energy companies in the geothermal sector are worth a total of US $ 1.11 billion. This is in line with our reporting on a recent Fitch Ratings report.

Based on information obtained by Kontan.co.id, the first green bond was worth US $ 320 million and the second green bond was valued at US $ 790 million. The first tranche has a tenor of 8 years and the second tranche is 18 years. “320 x 3.25% for an 8-year bond and 790 x 4.85% for an 18-year bond,” according to a source of Kontan.

Barito Pacific President Director Agus Salim Pangestu previously confirmed that the green bond is planned to be issued in the near future.

Agus claims, the green bond issued by a subsidiary of Star Energy is the first investment grade of the private sector in Indonesia.

“If successful, this issuance will be the first investment grade of the private sector for 2020,” said Agus. According to him, the bonds from Star Energy are the third green bonds that have been issued by the Barito Group. “This is the third green bond from the Barito Group, RLU, WW and in the future,” continued Agus.

Referring to previous reports, Moody’s Investor Service has assigned a Baa3 rating for senior secured bonds to be issued by Star Energy Geothermal Drajat II Limited and Star Energy Geothermal Salak, Ltd.

Both are owned by Star Energy Geothermal which is also a business entity of PT Barito Pacific Tbk (BRPT). Moody’s, in its official statement, Tuesday (29/09), stated that the outlook for the rating is stable.

The global bonds to be issued are divided into two tranches. Star Energy will use the proceeds from this corporate action to pay off a number of debts.

Part of the proceeds from global bonds worth US $ 1.1 billion will also be used for capital expenditures, working capital and other needs related to geothermal operations.

Star Energy has the exclusive right to explore, develop and utilize geothermal energy in Darajat and Salak through Star Energy Geothermal Drajat and Star Energy Geothermal Salak.

The two projects combined can produce electrical energy with a capacity of 647.8 MW. Star Energy operates 412.8 MW of them.

Meanwhile, Fitch Ratings in its official statement, Tuesday (29/09), stated that the outlook for the rating is stable.

Fitch Ratings assigns a BBB- rating to a senior secured bond to be issued by Star Energy Geothermal Drajat II Limited and Star Energy Geothermal Salak, Ltd.

Kontan.co.id also previously reported that BRPT is targeting Star Energy’s electricity capacity to be increased to 1,200 MW from the current 875 MW. Agus Salim Pangestu hopes that BRPT can achieve this target in the next few years.

“Star Energy is quite sure that the opportunity for expansion exists because there are many potentials in Indonesia. Star Energy is ready to take on the challenge,” said Agus to Kontan.co.id.

Source: Kontan.co.id