Indonesia has seen the sale of Asia’s first two high- yield corporate US dollar- denominated bonds since July 2008, adding to cautious optimism that the region’s market for such issues will improve in the second half of the year.
Indonesia’s state power utility Perusahaan Listrik Negara priced $750m in 10-year bonds early on Tuesday. Indonesian retailer PT Matahari Putra Prima priced a $200m three-year exchange deal on Monday, which brought in $116.6m in new money and $83.4m in the exchange portion.
PLN was priced at 99.155, with an 8 per cent coupon and a yield of 8.125 per cent and sold to investors in Asia, Europe and the US. Matahari was issued with a reoffer price of 97.532, a coupon of 10.75 per cent and an 11.75 per cent yield and was taken up predominantly by investors in Asia.
Fergus Edwards, head of syndicate in Asia for UBS Investment Bank, a joint bookrunner for PLN, said: “It’s fantastic to see this transaction price successfully reopening the Asian corporate high-yield market after it has been shut for over a year. It signals increased access to long-term capital for the businesses across the region.”
And Paul Au, head of debt syndicate in Asia at Citi, which was joint lead manager with UBS for the Matahari’s deal, said: “I would expect more high-yield issuance in the rest of 2009.”
Markets are cautiously optimistic on the significance of the transactions.
Tony Stringer, Fitch Ratings head of Asia-Pacific corporate ratings, said: “From my perspective, they confirmed a significant improvement in risk appetite that we’re seeing from investors globally . . . The Asian high-yield was one of the last frontiers obviously closed to investors.”
But, he added, both deals were “a little bit idiosyncratic”. State-owned PLN “is a blue chip name, which is really regarded as a quasi-sovereign risk. Nonetheless the fact it’s Indonesia and they’re confident in getting that much done is a positive sign,” he said.
Matahari “offered a premium price to existing investors, but they’re also extending that to new investors, so they’re raising a reasonably small amount of new money”, said Mr Stringer.
Branko Windoe, head of treasuries at Bank Central Asia, said the PLN bond issue was “probably one of the best returns in Asia given the fact that it is quasi-government”.
But Indonesia’s sovereign bonds with a ten-year maturity and 6.225 per cent yield are “very difficult to find”, he added, which meant the PLN issue was highly sought after.
