Telkomsel proves the exception to the rule

Pricing of a debut dollar bond comes tighter than expected as the Indonesian cellular operator bids to oust Globe Telecom as Asia''s sexiest high yield name.

An increased $150 million five non-call three offering was priced yesterday Tuesday by lead manager UBS Warburg after books closed three-and-a-half times oversubscribed. Launched on an issue price of 99.75% to yield 9.825% or 474bp over Libor 532.5bp over five-year Treasuries, the deal surprised a number of observers who believed that 10% would be a psychologically hard hurdle to cross.

The transaction broke the mould of recent Indonesian offerings from PT Medco and Bank Mandiri both of which required extensive credit work and in Medco case's extremely tight covenants. However, rather than consider Telkomsel's transaction the next logical marker in the re-opening of the international markets for Indonesian credits, investors appear to have viewed...

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