Indonesian power producer Cikarang Listrindo will hit the road this week to pitch a return to the dollar bond market, trying to find a cheaper alternative to its outstanding 2019 issue.
The company has picked Barclays and Deutsche Bank to manage a US dollar bond that could be worth as $550 million, and which will have a maturity of no more than 10 years.
Cikarang is returning to bond investors after a four-year lay-off. But the company has not been entirely absent from the capital markets: it pulled off a $272 million domestic IPO in May.
The heavy foreign participation in that deal, and Cikarang's newly-enhanced equity base, may have convinced the company it was a good time to turn to the bond market.
Executives from the company will hit the road on Monday, travelling to Hong Kong, Singapore, London and the United States ahead of a Reg-S/144A bond. They will then attempt Cikarang’s first dollar bond since February 2012.
The company has received approval from shareholders to raise as much as $550 million, and is planning to use the bulk of that to pay back its $500 million 2019 notes, which bear an interest rate of 6.95%.
The 2019 notes were, in turn, used to partly repay an old deal, allowing Cikarang to significantly cut its interest payments from the 9.25% it offered on its debut in 2010. While such a staggering drop in interest payments looks unlikely this time, the company will be hoping to get some saving.
The omens are good on that front. In early August, Lippo Karawaci returned to bond investors with a second-attempt at a bond exchange, as well as a tap. Investors proved receptive, allowing the Indonesian property developer to close a $260m tap to its April 2022 bonds at a yield-to-maturity of 6.2%. That deal was rated Ba3/BB-/BB-. Cikarang’s bond, on the other hand, has Ba2/BB rating from Moody’s and Standard & Poor’s.
Cikarang Listrindo is part-owned by Brasali Group, the property developer run by brothers Iwan and Aldo Brasali that controls listed companies including the $1.2 billion mall operator Metropolitan Kentjana. The company is the first independent power producer to go public in Indonesia.
Shares of the Indonesia-listed company are only slightly up since the May listing, compared to a 12.8% increase in the country's benchmark Jakarta Composite Index over the same period.
The company is planning to issue the new bond through its wholly-owned subsidiary Listrindo Capital B.V.