NR/2005-81
March 9, 2006

Guarantee for Rupiah Bonds Issued by Japanese Affiliate in Indonesia--Promoting the Asian Bond Market Initiative--

1. Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa)provided a guarantee today for the rupiah-denominated bonds[1] issued by P.T.
Summit Oto Finance (SOF; Head Office: Jakarta), an Indonesian corporation in which
Sumitomo Corporation has equity stakes. The corporate bonds issued by SOF total
1 trillion rupiah (about 12 billion yen) and are guaranteed by the Bank ofTokyo-Mitsubishi UFJ with a secondary guarantee by JBIC. The proceeds of thebond issue will be used for SOF's consumer financing to finance the purchase ofJapanese motorcycles, the sale of which has been rapidly expanding in parallel withthe recent robust growth of the Indonesian economy. This is the first bond issue by
SOF in the Indonesian capital market. (For a schematic illustration of this, see theAppendix.)
2. Many Japanese affiliates operating in Asian countries seek to finance theirbusiness operations in local currencies to avoid exchange risks. Throughout thesedifferent countries, however, underdeveloped bond markets have made it difficult forthese companies to raise funds with bond issuance, and therefore their financing
methods have been limited. In Indonesia, where only a limited number of bonds havebeen issued by domestic or foreign companies to date, even Japanese companies
with high credit standing have low name recognition in the local bond market. To
facilitate their effective bond issuance JBIC, in its capacity as a Japanese
governmental financial institution, is called on to enhance their credit. To meet theneeds of Japanese affiliates with increasingly diverse financing modalities, JBIC
utilized its guarantee facility this time to support successful bond issuance in the localmarket.
3. JBIC has been active in promoting the Asian Bond Market Initiative (ABMI),[2]
which was proposed by the Government of Japan in December 2002 and under which
various efforts to develop bond markets have been underway within the framework ofASEAN+3 (Japan, China, and Korea).[3] As the first such effort in Indonesia underthe ABMI, this guarantee will help develop the country's bond market and contribute todeveloping a favorable environment for Japanese companies' overseas businessdevelopment. JBIC promotes the ABMI through the use of its guarantee facility.

[1] The bonds are publicly-offered corporate bonds and to be listed on the Surabaya Stock
Exchange which is largest bond market in this country.
[2] The Asian Bond Market Initiative (ABMI) was launched as a measure to prevent therecurrence of the Asian currency crisis by channeling funds in the Asian region, which ischaracterized by a high savings rate, to investments within the region. Currently,
discussions are underway among the governments of ASEAN+3 (Japan, China, andKorea) countries on ways to develop and invigorate bond markets in Asian countries.
[3] JBIC has made the following contributions to the ABMI to date:June 2004: Provision of a guarantee for baht-denominated bonds issued by Japaneseaffiliates in Thailand.
December 2004: Provision of a guarantee for Korean collateral bond obligations.
September 2005: Issuance of baht-denominated bonds in the Thai market for funding theprovision of a two-step loan in baht for Japanese banks.
January 2006: Provision of a guarantee for ringgit-denominated bonds issued by aJapanese affiliate in Malaysia.

For further information
Mr. Okuda and Ms. Tamura
Press and External Affairs Division,
Public Relations Office,
Policy Planning and Coordination Department
Tel:03-5218-3100
Fax:03-5218-3955