Pending final regulatory sign-offs, joint leads Credit Suisse First Boston and UBS Warburg plan to launch a $200 million five-year fixed rate deal for Bank Mandiri in Jakarta on Monday. Presentations for the senior debt deal will continue in the Indonesian capital until the end of the week when the team moves to Singapore on Friday. A scheduled stop in Hong Kong after this is unlikely to happen, however, and final presentations will be conducted by telephone before pricing around April 14.
There will be no European roadshows this time round and the deal will consequently have a heavy Asian slant, although the Mandiri is hoping to pick-up supplementary demand from the Continent. Indeed, observers say pricing will be determined by the extent to which Mandiri tries to extend international distribution at the expense of tighter spreads.
Lack of supply from the country, Mandiri's quasi sovereign status and its zero risk weighting for local banks, will all play in its favour where the domestic back stop bid is concerned. Outstanding spreads have also held up well since the beginning of the year and there are a number of existing deals to provide pricing benchmarks.
In December 2001, Mandiri completed a $125 million FRN due 2006, which is currently trading at about 340bp over Libor to yield the equivalent of about 6%, although it is now considered extremely illiquid.
The bank also completed a $125 million lower tier 2 deal early last August, which has a 10-non call five structure. The August 2012 deal is currently bid at 107% to yield 8.64%, equating to 581bp over Treasuries or 574bp over Libor.
The leads are likely to try and bring pricing at least 100bp tighter than the outstanding sub debt deal and will be hoping that positive technical factors prevailing in the market will allow it to come tighter still. This would therefore imply a yield of anywhere between 7% to 7.5%.
Mandiri will announce its annual results today (Thursday). Analysts say there is likely to have been only marginal loan growth since the last quarter ended September 2002, although overall financial ratios continue to show steady improvement.
In September, the bank had an asset base of Rp250 trillion, of which Rp154 trillion comprised government zero re-capitalization bonds. The high percentage of zero risk weighted government re-cap bonds means that Mandiri has strong Capital Adequacy Ratios around 29.55%.
In the year to September, it was also able to reduce its NPL ratio from 12.75% to 9.15% and improve ROA from 1.44% to 2.08%.
