Indian groups set to price dollar bonds

The China-heavy Asian high-yield sector is set to see new players emerging in the coming months, with Indian corporates Greenko, GCX and Tata Steel setting the scene.
India to join high-yield action
India to join high-yield action

Green energy player Greenko, communications services company Global Cloud Xchange and steelmaker Tata Steel are set to price dollar bonds by this week's business, the latest players to emerge in the Asian high-yield space that are not actually from China.

The three bonds, which originate from India, come at a time when high-yield experts are calling for increase diversity in a space that is highly dominated by Chinese issuers.

According to Dealogic data, Chinese issuers have raised close to $11 billion with 31 deals in the high-yield space year-to-date, accounting for 72.3% of total market share. This is followed by Singapore, Indonesia, Macao and India, with market shares of 6.6%, 5.3%, 5% and 3.9% respectively.

“There are few Indian high-yield dollar issuers; commodities producer Vedanta is currently the largest,” said Sandra Chow, credit analyst at CreditSights, an independent research provider. “However, this may change given the wave of market enthusiasm after Bharatiya Janata Party’s recent election win.”

The BJP swept to power in a May election with the biggest mandate for an Indian party in 30 years, ridding the nation of political uncertainty and restoring confidence in its capital markets.

Rolta is the most recent Indian high-yield issuer to tap the dollar markets. The company raised a $300 million five-year bond last week, pricing below par to give an effective yield of 9%.

Greenko and GCX

Greenko, a leader in Indian renewable energy sector, is marketing a five-year dollar bond on Wednesday, with proceeds mainly used to refinance majority of its secured, local debt, according to sources familiar with the matter.

The new offering has an initial price guidance of around the 8.25% area, according to a term sheet seen by FinanceAsia, but credit analysts estimate that the fair value yield for the bond between 8.5%-9%.

Global power producers, including US-based Dynegy, Indonesia’s Cikarang and India’s Vedanta, have outstanding bonds expiring in April 2018, February 2019 and January 2018 respectively that make good comparables, and translates into fair values of 9.8%, 8.8% and 7.8% for Greenko’s new offering.

Meanwhile, GCX, a wholly owned subsidiary of Reliance Communications, is marketing a debut five-year dollar bond that's callable in the second year on Thursday.

Around $250 million worth of proceeds will be used to refinance a Standard Chartered Bank loan facility, and the remaining used for capital expenditure and general corporate purposes, according to sources close to the deal.

GCX's new offering has an initial price guidance of 7.25% area, but credit analysts are estimating a fair value yield of around 7.8%.

This is based on comparisons with fellow cable operator Pacnet, the Indian IT company Rolta and the US telecoms and internet service provider Level 3 that have existing bonds maturing in 2018, 2019 and 2021 respectively, which translates into fair values of 8.1%, 8.4% and 7.8% respectively for GCX’s new bond.

Deutsche Bank is the sole global coordinator and joint bookrunner of Greenko’s bond. Other bookrunners include Barclays, Investec, JPMorgan and Standard Chartered.

Deutsche Bank and Standard Chartered are the joint bookrunners of GCX’s offering.

Tata Steel

Aside from GCX and Greenko, Tata Steel is also in the works for a potential dollar-denominated high-yield bond, launching a benchmark dual-tranche Reg S bond on Thursday shortly after it embarked on investor road shows on July 22.

The steelmaker is marketing a 5.5-year offering at a price area of 5.125% and a 10-year tranche at a price area of 6.25%, according to sources. The proceeds will be used to fund pre-payment or repayment of the group's offshore debt obligations and for general corporate purposes outside India.  

ANZ, Bank of America Merrill Lynch, BNP Paribas, Citi, Credit Agricole, Deutsche Bank, HSBC, Morgan Stanley, Rabobank International, The Royal Bank of Scotland, SBI capital Markets and Standard Chartered are joint bookrunners of Tata Steel's bond.  

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