US$14b default forgotten as Indonesia billionaire Widjaja sells debt

Foreign investors have either forgiven or forgotten the events that involved the billionaire Widjaja family in Asia's worst corporate default.

Companies backed by 91-year-old Eka Tjipta Widjaja, Indonesia's fourth-richest person, received orders twice the size of two bond issues last week at yields below the average of Asian junk-rated peers.

Developer Bumi Serpong Damai raised US$225 million from a debut sale of US dollar notes. Golden Agri-Resources, the world's second-largest palm-oil producer, issued S$125 million (HK$731 million) in its third sale in a year. The family is preparing a bid for an Indonesian coal producer in the midst of a dollar-debt restructuring.

Fourteen years after Widjaja's sprawling Sinarmas empire was pummelled by a US$14 billion default by its Asia Pulp & Paper business, investors are showing faith in its credit.

The combined market value of 12 family-controlled companies listed on the Singapore and Jakarta exchanges has held steady at about US$15 billion over the past year. Moody's Investors Service rated Bumi Serpong at Ba3, the third-highest junk grade, citing the developer's healthy finances.

"There's always going to be new investors keen to try their luck with the group even after the Asia Pulp & Paper debacle," said Charles Macgregor, head of Asia high-yield research in Singapore at Lucror Analytics.

"They will probably come back every now and then to re-establish their position in the debt market through some of their better businesses."