Garuda Signs Rp500bn CCS Deal with BNI
26 June 2014 11:40 WIB
TEMPO.CO, Jakarta - State airline PT Garuda Indonesia and state lender PT Bank Negara Indonesia (BNI) agreed on a three-year, cross-currency swap (CCS) worth Rp500 billion (US$42.3 million) in an attempt to hedge the airlines' finances against foreign currency fluctuations.
"This cross-currency swap transaction with Garuda Indonesia shows our commitment to offering hedging solutions to SOEs," BNI corporate secretary Tribuana Tunggadewi said yesterday.
In the cross-currency swap agreement, the two parties will exchange interest payments and principals in rupiah for an equally-valued loan in foreign currency.
BNI finance director Suwoko Singoastro said the transaction proves that SOEs are committed to lessen the impact of currency fluctuations. He said BNI is well-prepared to offer hedging solutions for state-owned or private companies.
Meanwhile, Garuda's finance director Hanggrito Harjono said the deal was made to protect the airline's finances from currency fluctuations. The rupiah correction, which had passed Rp12,000 per US dollar on Wednesday, and the rising price of fuel make it difficult for Garuda to compete with other airlines.
Hanggrito said Garuda had previously decided on fuel hedging to reduce exposure to volatility and possible fuel cost increases.
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