A second Indonesian state-owned builder is seeking restructuring as the country’s construction push heightens worries about the sector’s ballooning debt burden.
PT Wijaya Karya has asked banks to allow it to delay making payments on its liabilities as it seeks to reorganize debt and strengthen its capital, an executive said. The nation’s largest listed construction company, PT Waskita Karya, got approval in February from investors to defer payments on three rupiah-denominated bonds.
The moves lay bare concerns about the fallout from President Joko Widodo’s infrastructure drive on the nation’s banking industry and the ability for the government to deliver future projects. The predicament of the real estate sectors in China and Vietnam also means that investors are focused any similar issues emerging in Indonesia, Southeast Asia’s largest economy.
The country’s four-biggest construction firms, including Waskita, have seen their debt load swell since the president, known as Jokowi, took office in 2014, to roughly 130 trillion rupiah ($9 billion) as of the end of the first quarter.
Wijaya Karya’s request applies to bank loans owed by the parent company and the builder has no plan to seek a payment delay from its bondholders, corporate secretary Mahendra Vijaya said by phone. The move follows the record first-quarter loss reported by the Jakarta-based firm earlier this month.
“We are seeking for standstill to our banks for the delay in payment of principal and interests,” Vijaya said Tuesday. “The standstill is part of our plan to improve and restructure our financial positions.”
Lending by banks and state-owned financing firms to Wijaya Karya stood at 12.6 trillion rupiah as of March, according to its quarterly report. PT Bank Mandiri was the biggest lender, with 3.9 trillion rupiah of loans.
