Asset Backed Securitisation (ABS) constitutes a relatively new but fast growing segment of debt market in global capital market. In recent years, the ABS market has enabled companies and banks to finance a wide range of asset.

Indonesia embarked on a plan to encourage securitisation nowadays, particularly in the local market. Bapepam, the capital markets regulator, produced a set of proposal for the regulation of onshore securitisation including a mechanism for establishing onshore SPV's using some form of KIK-EBA.

Securitisation is a favorable alternative of source of fund for Bank BTN. ABS provides BTN with sufficient resources in terms of underlying assets, release the burden of illiquid assets by putting it off balance sheet in return of an up front cash inflow without affecting the proportion of debt in the company. As one of alternative funding for Bank BTN, it is considerably difficult to issue ABS due to some limitations in regulation and government support. Some factors to be concerned of ABS issuance in Indonesia, are:

1. Legal : ABS legal basis, true sale requirement, bankcruptcy remote and stamp duty.

2. Accounting: Sale, financing, neither sale or financing, partial sale, part sale & part financing.

3. Rating: There is no benchmark in Indonesia

4. Tax: Sale or financing treatment, Tax for SPV, investor and originator.

Should BTN plan to issue ABS in the year 2004, some factors that need to be consider are:

1. Legal issues in land ownership, tax and accounting issues.

2. ABS issuance fee which is estimated to be higher than issuance fee of ordinary bonds.

3. Issues of educating the prospective investors

4. Secondary market of the securities as to make sure the liquidity and attractiveness of this tradable securities.

To show how the ABS give benefit to BTN, KIK-EBA, supporting professional, supporting institutions and investors, we calculate Asset Backed Securities in some terms and conditions that suitable most for Indonesian Capital Market conditions into 3 alternatives:

Alternative 1: Simple Pass Through -Variable & Fixed rate calculation .

Alternative 2: Collateral Mortgage Obligation calculation

Alternative 3: Simple Pass Through Spread calculation





From the calculation, we recommend Bank BTN to issue the Bank BTN KIK-EBA on term and condition as follows:

.Format : KIK-EBA simple pass through Variable Rate

.Tenor : 89 months.

.Amount of asset portfolio: IDR500 billion

.Amount of KIK-EBA : IDR 528billion

.Coupon : SBI + 4.50% .Reinvestment rate : 6.00%

.Indicative Yield : 12.01%

.Yield to maturity : 21.78%

.Coupon payment : monthly

.Principal repayment : Amortization as per payment schedule of underlying asset

.Servicing fee : 0.75%

There are some internal factors that need to be fully organized in Bank BTN such as working unit, Information & Technology and Loan & Asset administration. Besides that, several factors that need to be provided before the KIK-EBA issuance successful are legal, accounting and tax aspects, support from the capital market and also the establishment of Secondary mortgage facility and Secondary mortgage market in Indonesia.



Research Location: PT. Bank TAbungan Negara, Tbk.

Supervisor: Junius Tirok, Ph. D.

Accepted Date : 28 April 2004



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