Indonesia kicks off busy post-holiday bond calendar

The Republic of Indonesia unveils its long-awaited 10-year bond which is expected to raise up to $2 billion. China Resources Power, Fosun, MIE, Melco Crown and GLP Logistics also line up deals.

The Republic of Indonesia has revealed plans to launch a benchmark-size 10-year dollar bond, after originally mandating the lead banks back in February.

According to one person familiar with the borrower, Indonesia wanted to complete its credit updates and was in no rush to launch the deal, preferring instead to wait for the right window to tap the market.

The deal should raise $1 billion to $2 billion, which is the typical benchmark size for sovereign borrowers.

The price whisper for the 10-year bonds started in the area of low 5% and the guidance was in the 5.125% area. The deal is expected to price later tonight. Indonesia’s 2020 bonds are the closest comparable and were yielding 4.84% yesterday, and have not moved around much in secondary trading since the new deal was announced.

There was previously some talk that Indonesia was planning to issue a dual-tranche 10-year and 30-year bond. But there was no mention of that in yesterday’s announcement, to some people’s surprise.

Standard & Poor’s upgraded Indonesia’s credit rating from BB to BB+ earlier this month. The sovereign is rated Ba1 by Moody’s and BB+ by Fitch. Deutsche Bank, J.P. Morgan and UBS are joint bookrunners.

Another Indonesian borrower, Indika Energy, is also expected to fix the yield on a new bond issue today. Price guidance for the $300 million seven-year bonds is 6.875% to 7.375% and the coupon is fixed at 7%. The company plans to exchange up to $165 million of its $250 million bonds due 2012 for new notes maturing 2018 and the remainder will be new money. Citi is the sole global coordinator and bookrunner. Goldman Sachs, Standard Chartered and UBS are also joint bookrunners.

Busy pipeline
Several other Asian borrowers announced a flurry of new mandates yesterday — both in the dollar and offshore renminbi bond markets.

China Resources Power plans to issue a perpetual non-call five-year benchmark bond. The coupon will be fixed for the first five years and will reset to a fixed-rate bond from the fifth to 10th year at the initial spread over the then prevailing five-year US Treasuries.

There is a 100bp step-up in the 10th year and the bonds will reset to a fixed-rate note that pays the initial spread plus 100bp over the then prevailing five-year US Treasuries. The notes are callable in May 2016 or any reset date thereafter.

The issuer has the option to defer coupons subject to a dividend pusher with a six-month look-back period as well as a dividend stopper. The hybrid is expected to receive 50% equity treatment by the rating agencies. China Resources Power is rated Baa2 (stable) by Moody’s and BBB (negative) by Standard & Poor’s. Citi and Goldman Sachs are joint bookrunners. The proceeds will be used for capital expenditure and working capital.

Fosun has mandated Goldman Sachs, Standard Chartered and UBS as joint bookrunners for a US dollar senior benchmark. The company kicks off roadshows in Hong Kong today and tomorrow, moves on to Singapore on Friday and London on Monday. It will concurrently hold US roadshows in Boston on Friday, New York on Monday and LA on Tuesday.

MIE Holdings, an independent upstream oil company in China, has mandated Bank of America Merrill Lynch as sole global coordinator and bookrunner for its debut $400 million five-year non-call-three senior bond offering. Deutsche Bank is a joint bookrunner and UBS is a lead co-manager.

The Reg-S/144a deal is expected to be rated B+ by S&P and B by Fitch. The transaction is expected to launch after an investor roadshow covering Asia, Europe and the US, which starts today.

In the offshore renminbi bond market, Melco Crown Entertainment has appointed Bank of America Merrill Lynch and Deutsche Bank as joint global coordinators for an unrated offshore renminbi bond. Citi and Royal Bank of Scotland are also joint bookrunners.

Elsewhere, GLP Logistics will be kicking off a two-team roadshow in Hong Kong and Singapore today. The roadshows will continue to be held in Hong Kong tomorrow. The company plans to offer up to Rmb3 billion of fixed-rate notes under its newly established medium-term note programme. CICC, Citi, J.P. Morgan and Goldman Sachs have been mandated as dealers of the renminbi-denominated notes.

Philippine port operator ICTSI has also mandated Citi and HSBC for its perpetual bond issue and roadshows kicked off last week.

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