(Sept 28): Indonesia’s government has paid bondholders the 722 billion rupiah (RM164 million) owed to them after state-owned builder PT Waskita Karya failed to settle it last week, marking the first payout under a pandemic-era guarantee programme for securities issued by state companies.

“The total claim arising from the failure to repay the 722 billion rupiah principal” has been fully paid by the government and PT Penjaminan Infrastruktur Indonesia as guarantors, Tony Prianto, director of State Financial Risk Management at the Ministry of Finance, said in response to a Bloomberg query on Monday.

The government’s share was 610 billion rupiah and PII’s share was 112 billion rupiah, he said. Distribution of the funds to bondholders is scheduled for Monday, he added. The claim payment “does not constitute funding or additional financing provided to Waskita Karya” and it “does not extinguish Waskita Karya’s obligation,” said Prianto. PII is a state-run firm that provides government-backed guarantees for infrastructure projects and programmes.

Waskita is the first issuer to make the claim under a mechanism introduced in 2020 to support Indonesia’s economic recovery during the Covid-19 pandemic. The swift repayment shows the government’s guarantee programme is well funded to meet debt obligations of state-run firms covered by it.

Cleaning up these companies, including builders which accumulated large debts during former President Joko Widodo’s decade-long infrastructure drive, has become one of the challenges facing current leader Prabowo Subianto’s sovereign wealth fund Danantara as it seeks to restructure troubled state assets while preserving capital for new investments.

The government had set aside 6.45 trillion rupiah in reserves for guarantees under its National Economic Recovery programme, according to the 2026 budget documents from the Finance Ministry.

Waskita has allocated about 28.9 billion rupiah to cover interest payments on the notes and a separate bond issuance. Trustee PT Bank Mega had submitted the guarantee claim to the guarantors which had 20 business days after the scheduled payment date to settle it.

Uploaded by Arion Yeow