PT Indika Inti Energi, a privately owned energy group run by Indonesian businessmen Agus Lasmono and Wiwoho Basuki, raised $250 million from its first dollar- denominated bond sale, attracting almost $4 billion of demand.

Indika, which plans to pay debt and buy assets, priced the five-year bonds to yield 8.497 percent, 391.4 basis points more than U.S. Treasuries, according to an e-mail sent to investors. Strong demand helped the company cut the yield from as high as 8.875 percent set on April 26. A basis point is 0.01 percentage point. JPMorgan Chase & Co. and ING Groep NV managed the sale.

Investors are counting on growing Chinese demand for coal from Indonesia's low-cost producers to drive Indika's earnings. China, the world's biggest producer and consumer of the fuel, generate two-thirds of its electric power from coal and became a net coal importer for the first time in January.

``People are very bullish on the coal sector in Indonesia as China becomes a net importer,'' said Eugene Kim, chief investment officer of Hong Kong-based Tribridge Investment Partners Ltd., a hedge fund managing about $100 million. ``Indonesia's low-cost coal producers stand in good positions to fill that demand.''

China increased coal imports by 53 percent to 5.67 million metric tons in March, the Beijing-based Customs General Administration said April 23. Exports fell 36 percent to 3.71 million tons in the same month, the data show.

Moody's Investors Service rates the 8.5 percent bonds B2, five rungs below investment grade, reflecting Indika's strong dividend cash flows from Kideco, Indonesia's third-largest coal mine and one of the world's lowest-cost producers and exporters.

Spending Plans

Indika will use $103 million of the proceeds to refinance debt; $60 million to buy an Indonesian coal mine; $40 million to invest in two power plant projects; $31 million to boost working capital and $16 million to meet an account payment, Moody's said.

The company owns 46 percent of Kideco, which is in Kalimantan on Borneo island. Samtan Co., a South Korea energy company, holds 49 percent and a local firm holds the rest.

Investors in Asia bought 48 percent of the debt, while 36 percent was sold in Europe and 16 percent in the U.S., according to the e-mail. Hedge funds are the biggest investors in the bonds, holding 38 percent, the e-mail shows.

``Investors' demand for recent high-yield deals in the region is shattering the myth that Asia is only a participant in non-investment grade debt,'' said Tim Donahue, Hong Kong-based head of Asia high-yield at JPMorgan. ``I expect the rest of the year to continue the recent momentum.''

Berlian Sale

PT Berlian Laju Tanker, Indonesia's biggest shipping company, doubled a seven-year bond sale to $400 million last week when it priced the debt to yield 291.4 basis points more than U.S. Treasuries, Bloomberg data show. The securities are rated BB-, three rungs below investment grade, by Standard & Poor's.

Kideco said in January it plans to produce 20 million tons of thermal coal this year compared with 19 million tons last year.

Indonesia's $351 billion economy, the largest in Southeast Asia, grew 6.1 percent in the fourth quarter, its fastest pace in two years, on rising consumer demand and exports. Inflation slowed to 6.5 percent last month, from 18.4 percent in November 2005. The central bank cut its benchmark rate 10 times since May.

As much as 95 percent of Kideco's output this year has been committed to buyers mainly from Korea, Taiwan and Japan, Kim Sung-Kook, president director, said in Jakarta on Jan. 19.

Asian prices for thermal coal may rise 4.8 percent to $55 a metric ton in 2007 because of a decline in Chinese exports, Goldman Sachs JBWere Pty said in a Jan. 16 report.

PT Berau Coal, one of Indonesia's biggest miners, sold $225 million of five-year fixed-rate notes in December, pricing the securities to yield 9.375 percent. Moody's rates Berau Coal's bonds B1, four rungs below investment grade.

Agus Lasmono took control of Indika from his father, Sudwikatmono, a half-brother of former Indonesian president Suharto, in 1998. Wiwoho Basuki is the founder of Tripatra, an engineering management company.