PT Truba readies high-yield deal as Kexim drops Samurai

The Indonesian construction firm mandates UBS for its Reg-S three-year senior bond transaction, while KoreaÆs Export-Import Bank shelves its Ñ30 billion Samurai.
Indonesia's PT Truba Alam Manunggal Engineering has mandated UBS in what could be the first high-yield bond deal in Asia this year. In less than a week, three bonds have priced including the year's first non-government linked bond transaction (Swire), and the region's first triple-B deal (Nine Dragons Paper).

Truba has announced its intention to raise dollar funds in a Reg-S three-year senior bond transaction following an investor roadshow in Hong Kong (today), Singapore (April 28 and 29), and London (May 1 and 2).

The notes, listed in Singapore, are expected to be rated B(stable)/B(stable) by Standard and PoorÆs and Fitch.

No details of the expected size or yield have been released. These will be announced no earlier than May 6 due to holidays in Hong Kong, Singapore and UK.

The company is reported to be a strong credit relative to its rating. It describes itself as a contractor firm with business involvement in construction, design, engineering, procurement and construction of buildings, infrastructure and plants.

Truba is reportedly responsible for building a large part of the power plants operated by state-owned Indonesian electricity utility PT Perusahaan Listrik NegaraÆs (PLN). In June, PLN raised $1 billion through a Ba/BB rated dual-tranche $500 million 10-year and $500 million 30-year deal, also through UBS.

Investors who choose to participate in the Truba transaction, should it come to fruition, will have to deal with Asia Pulp and PaperÆs (APP) former CFO, Hendrik Tee. APP famously defaulted on $12 billion worth debt in 2001. Tee has been president commissioner of Truba since May 21.

Meanwhile, while dollar issuance is looking up, KoreaÆs Export-Import Bank (Kexim) is having less luck in the Samurai market. The company shelved its proposed deal on Wednesday, because it could not raise its target Ñ30 billion ($289.7 million) at rates which it found satisfactory.

Sources say that leads Nikko Citi, Daiwa and Nomura built a book of Ñ22.5 billion over three tranches, including a five-year at 155bp over Libor, and a three-year at 120bp over Libor. However, at those levels, the deal fell short of KeximÆs size expectations for the issue.

One source speculates that Kexim pulled the deal because it failed to match the size that commercial bank Kookmin achieved (Ñ24 billion) earlier this month. Korean borrowers are notoriously competitive in terms of achieving the best possible funding levels versus their competitors.

However, sources at Kexim state: ôWe didnÆt get the size we wanted at the cost we were hoping for. We arenÆt desperate for funds since we raised SFr350 million ($349 million) last week, so we decided to cancel the deal. It has nothing to do with KookminÆs performance.ö

Another syndicate banker corroborates KeximÆs statement: ôHad it followed through with the deal, Kexim would have priced 20bp to 30bp behind what they were promised by the leads. At these levels, funding costs are not that attractive versus what the bank can achieve in the dollar market.ö

One source states that Kexim may have jeopardised its relationship with onshore investors, given the laborious approval process to secure funds for the transaction. The rumour is that Kexim pulled the deal just two days before it was due to price, and that between 20 and 30 investors had already committed.

Whichever the reason, itÆs unlikely the decision to withdraw was taken lightly. ôKexim needs approval from the government before it can go out and raise funds offshore,ö says another source. ôMoreover, the bank reportedly sent a team of four to Japan to meet as many investors as possible, so it was a serious commitment.ö
¬ Haymarket Media Limited. All rights reserved.
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