Did Indika Just Crack the Door Open for BUMA?

Asia Fixed Income Analyst

Derek Silva

Credit

Indonesia coal is hot right now. Part of the excitement lies behind the new deal signed this week by Indonesian Coal Mining Association (APBI) with the China Coal Transport and Distribution (CCTD) association, which would see $1.5bn of thermal coal supplied to China over the next three years. Until the past week or so, there has been little to celebrate in the sector for 2020.Things are looking brighter for 2021 already. The USD bonds of Indonesian coal issuers have taken notice and responded nicely. Many have returned to a cash price back over par (100).And while the bonds from BUMA (Bukit Makmur Mandiri Utama) have also finally started to react, and the shares of BUMA's parent company have reached 52-week highs, we think there is still very good upside in the bonds, indicated at a cash price of ~88.5 and offering a short-dated yield-to-maturity of ~20% (and much higher yield to call).

Indonesia coal is hot right now. Part of the excitement lies behind the new deal signed this week by Indonesian Coal Mining Association (APBI) with the China Coal Transport and Distribution (CCTD) association, which would see $1.5bn of thermal coal supplied to China over the next three years. Until the past week or so, there has been little to celebrate in the sector for 2020.Things are looking brighter for 2021 already. The USD bonds of Indonesian coal issuers have taken notice and responded nicely. Many have returned to a cash price back over par (100).And while the bonds from BUMA (Bukit Makmur Mandiri Utama) have also finally started to react, and the shares of BUMA's parent company have reached 52-week highs, we think there is still very good upside in the bonds, indicated at a cash price of ~88.5 and offering a short-dated yield-to-maturity of ~20% (and much higher yield to call).

Indonesia Coal Is on Fire; New China Deal to Help in 2021

Delta Dunia Makmur

Indonesia Coal Is on Fire; New China Deal to Help in 2021