Bank Mandiri of Indonesia is close to announcing lead managers for a proposed $300 million to $500 million bond deal. In January this year the bank sent out a request for proposals and received 15 responses, according to Paul Tehusijarana, group head of treasury at Bank Mandiri in Jakarta. The bank has whittled that list down to five players, HSBC, Citigroup, JPMorgan, Deutsche Bank and UBS, but "we are still in the process of choosing," says Tehusijarana.
The bank is looking to appoint two joint lead managers as well as its domestic securities subsidiary Mandiri Sekuritias. Tehusijarana says that the board of directors of Mandiri will make the decision shortly.
Mandiri has applied to the central bank, Bank Indonesia for approvals to sell between $300 million and $500 million in dollar bonds. The timing of the deal will depend on the speed of the approval process from Bank Indonesia. "It could take another couple of weeks," says Tehusijarana. "It really depends on Bank Indonesia."
Once approvals have been won and lead managers mandated, the bank will then start the process of speaking to the rating agencies before launching the deal.
The bonds will be the fourth issue from the bank's $1 billion debt issuance programme, and the first issue since April 2003. The bank will be hoping that it can emulate the success of that transaction, lead by UBS and CSFB, in which the upsized $300 million deal was five times oversubscribed and achieved pricing 50bp tighter than the Republic of the Philippines despite being rated five notches lower.
The bank has certainly performed well in the intervening years. Since listing, Mandiri's share price has risen by 185%. And last week it announced a 14% increase in net profit for 2004 to Rp5.2 billion. Given the demand for yield among global bond investors, Mandiri should find a willing audience for its story.
There are some in the market who question whether the market's insatiable appetite for Asian credits can handle the glut of paper that is coming out of Asia in general and Indonesia in particular in coming weeks and months.
Mandiri specifically will be careful that its bond deal does not clash with that of the sovereign. The lead managers of that bond deal, Citigroup, Deutsche Bank and UBS, have tentatively decided to start road shows on March 17th with two teams going to Hong Kong, Singapore, London, Frankfurt, Los Angeles, Boston and New York. However, the dates and itinerary are not finalized and could change. The leads are suggesting a pricing date of March 23rd, although again, this is subject to change.
Other than the sovereign and the biggest bank, a raft of other deals is now on the cards from Indonesia. Three banks have announced plans to tap the markets: BNI ($300 million via Barclays and JPMorgan); Bank Internasional Indonesia ($200 million via Barclays Capital, DBS and UBS); and Bank Niaga ($100 million via Citigroup). Coal producer Bumi Resources has also stated it wants to raise $600 million via Merrill Lynch and Indosat has said it is planning a trip to the markets, although size and underwriter are yet to be determined.
