Berau Coal Energy issues $350 million high-yield bond

The Asian high-yield markets were reopened last week with a B2/B rated $350 million five-year issue from Berau Coal Energy. It was the first deal to come to market from a single-B borrower since Melco Crown Entertainment issued its $600 million 10.25% eight-year bond in mid-May.

The bonds pay a coupon of 12.5% and were priced at par. The maturity date on the 144A/Reg-S senior secured notes has been set to July 8, 2015, but they are callable after three years.

The issuer was Berau Capital Resources, with Berau Coal Energy and all of its active subsidiaries, including coal producing entity Berau Coal, as guarantors.

Investors looked to Adaro (7.75% $800 million, 2019), Bumi Resources (12% $300 million, 2016), Indika Energy (9.75% $230 million, 2016), and Bukit Makmur Mandiri Utama, or Buma, (11.75% $315 million, 2014) as comparable bonds for this issue. When the roadshow started on June 22 all these bonds were trading within a price range of 103.6 to 105.75 -- Adaro was offering a yield of 7%, Bumi 10.9%, Indika 8.5% and Buma 10.6%.

At the time of pricing on Wednesday, June 30, the yields had pushed out for all bonds, with Adaro quoted at 7.55%, Bumi at 11.5%, Indika at 8.7% and Buma 11.5%.