Obligasi Berkelanjutan IV Lontar Papyrus Pulp & Paper IndustryTahap IV Tahun 2026 & Sukuk Mudharabah Berkelanjutan IILontar Papyrus Pulp & Paper Industry Tahap IV Tahun 2026

Rating: idA / idA(sy) (Pefindo)

Sinar Mas/APP’s – Backed Integrated Pulp and Tissue Producer with Established Scale

PT Lontar Papyrus Pulp & Paper Industry (LPPI) is the pulp and tissue arm of the Sinar Mas / Asia Pulp & Paper group, running a single integrated mill complex at Tebing Tinggi, Jambi with 1.08mn tonnes of pulp and 234k tonnes of tissue capacity a year. It is 99.92% owned by PT Pindo Deli Pulp and Paper Mills with no public float, sells roughly 77% into the domestic market, and booked USD648.6mn and USD331.9mn of net sales in FY25 and 1H26 – upstream integration on a narrow product base, which is what carries the idA rating, stable outlook, reaffirmed 5 August 2026.

Indicative Structure

Obligasi: up to IDR825.0bn · Sukuk Mudharabah: up to IDR676.6bn · combined up to IDR1.50tn
Seri A (3Y) 9.50%-10.00%, Seri B (5Y) 10.00%-10.50%
Clean basis (unsecured), quarterly coupon, bullet repayment at maturity
Proceeds fund: debt repayment, business activities and working capital – a refinancing-oriented issuance, not new capex

Why This Deal

Strong Profitability and Improving Debt-Service Capacity. LPPI delivered USD127.4mn of net profit on USD331.9mn of sales in 1H26, implying a strong 38.4% net margin, while EBITDA reached USD143.8mn, translating into a 43.3% EBITDA margin, up from 40.8% in FY25. Profitability remains significantly stronger than Indah Kiat, supported by Lontar’s higher-value tissue mix and integrated operating structure. The balance sheet remains manageable, with adjusted debt of USD1.28bn against USD1.57bn of adjusted equity, while adjusted debt/EBITDA improved to 4.4x from 4.6x in FY25. Interest coverage also strengthened, with EBITDA/IFCCI at 2.6x in 1H26 versus 2.3x in FY25, providing better debt-servicing capacity despite still-elevated leverage.
The qualifiers are real and worth pricing. Lontar is about a fifth of Indah Kiat’s size, is rated by one agency rather than two, and sits one notch lower at idA. USD63.3mn – 44% – of 1H26 pre-tax profit was a net FX gain rather than operations, leaving an underlying pre-tax margin of 24.6% against 43.7% reported. Related parties account for USD13.5mn of USD17.8mn in trade receivables plus USD213.4mn of non-current receivables.
Attractive Carry Compensates for LPPI’s One-Notch Rating Differential. III was priced at 9.50% for the 3Y and 10.00% for the 5Y, leaving the lower end broadly flat versus the previous primary level while the upper end adds 50bp of additional compensation. Against PHEI fair value for the idA notch of 9.27% and 9.36%, the range implies 23–73bp of concession for Seri A and 14–64bp for Seri B, with the more meaningful compensation emerging at the upper end of the pricing range. Against Indah Kiat, rated one notch higher at idA+, the 9.04% and 9.37% reference yields imply LPPI spreads of 46–96bp for 3Y and 13–63bp for 5Y, broadly consistent with the rating differential. Overall, the pricing provides a reasonable compensation for LPPI’s lower rating, with the upper end of the range offering the more attractive entry point for investors seeking additional carry