After delaying pricing for one day because of the London bombings, PT Bank Niaga and Chinese Overseas Land (COLI), completed eurobonds on Friday (July 8).
Citigroup and Commerce International Merchant Bank priced a $100 million 10-year non-call five-year subordinated bond for the Indonesia bank through initial price guidance. The B2/B+ (Fitch) rated bonds were initially marketed at were at 8% to 8.25% before being tightened to the 8% area during the early days of roadshows.
Final pricing came at 99.188, on a semi-annual coupon of 7.75% to yield at 7.95%. This equates to 412.5bp over five-year US Treasuries. Fees are 40bp.
The order book was said to be five times oversubscribed, attracting a broad range of investors. A total of 71 investors took the deal, with Asia accounting for 84%, Europe 15% and the remaining 1% going to US offshore accounts.
The deal represents the first offering from an Indonesian Bank this year and its success will likely help to open up the market for other high yield Indonesian credits, which have postponed plans to raise money in the overseas debt capital markets after General Motors and Ford were downgraded to junk status and concern that the US federal Reserve would raise rates faster than initially projected pushed yields widener earlier this year.
Bank Negara Indonesia, Bank Mandiri and Bank Danamon have all put prospective offering on hold awaiting a more favourable market environment.
JP Morgan and HSBC also priced a shortened $300 million seven-year Reg S only issue for mainland property developer COLI on Friday after it shelved a longer tenured deal in May.
At that point, the group marketed a $300 million to $400 million 10-year deal at 180bp over mid swaps. However, the deal was postponed after garnerning just $200 million in orders in face of difficult market conditions.
In order to attract the Chinese banks, which had been reluctant to commit in May, the revised deal was cut to seven years to offset the overall sensitivity of the notes to interest rate changes. The new deal has an issue price of 99.404% and coupon of 5.75% to yield at 181bp over seven-year Treasuries, or 150bp over mid-swaps. Fees are 30bp.
The notes, rated Baa3 by Moody's and BBB- by S&P, attracted an order book amounting to $440 million and had concentrated distribution to just 41 accounts. Distribution was taken up primarily by Asia, which accounted for about 86% of the book with the remaining 14% coming from Europe. Onshore China was said to have accounted for 40% of the book.
COLI is a Hong Kong based property developer controlled by the state owned China State Construction Engineering Corporation and is one of the largest property developers in China.
Proceeds from the deal will be used to fund expansion as well as refinancing existing debt.