Travellers International Hotel Group, jointly owned by Alliance Global and Genting Hong Kong, issued a debut $300 million high-yield bond late Wednesday.
The Reg-S senior unsecured bond pays a 6.9% coupon and was reoffered at 98.777 for a yield of 7.125%. This represents the lowest-ever yield achieved by an Asian gaming company. The deal also bears the lowest-ever coupon among unsecured US dollar bond offerings by gaming companies globally, even though the bonds came to market unrated -- an all-too familiar path for Philippine corporate issuers.
However, Travellers' parent companies are both well capitalised. Alliance Global issued its own debut high-yield bond in August in the form of a $500 million seven-year transaction, and Genting Hong Kong is ultimately held by Malaysia's Lim family and Genting Malaysia.
Formal guidance was announced at around 7.5% early Tuesday morning in Asia, while the issue size was said to be between $300 million and $500 million.
Nomura analyst Pradeep Mohinani said he viewed this as fair as it would give about 10bp to 15bp of upside depending on the final size of the proposed bond.
The Travellers bonds offered a 100bp spread pick-up versus Alliance Global's 2017 bonds ($500 million 6.5% coupon) and a 30bp pick-up against Melco Crown Entertainment’s 2018s ($600 million 10.25% coupon).
“In essence, the Alliance Global credit is more developed and hence a credit that should trade tighter,” said a person familiar with the deal. “With Travellers, investors are buying into the future story.”
Looking favourable against its key comparables, the notes attracted an overwhelming response from investors, resulting in a final order book in excess of $1 billion and orders from 88 accounts. This allowed the bookrunners to tighten the guidance to 7.125%, although the size was confirmed at the low end of the range at $300 million.
This transaction was well received by Asian investors with Philippine accounts taking 50% and the rest of Asia buying 44%. European investors took up the balance. Bank accounts received 59%, fund managers took 25%, private banks 14% and insurers 2%.
Traders said there was continued buying in the secondary market by both local and offshore investors and by late yesterday afternoon the bonds were trading above the reoffer price.
Travellers is one of four new gaming operators in the Philippines to have received licences from PACGOR, the country’s gaming regulator, and the first to have commenced operations via Resorts World Manila.
The proceeds from the offering are expected to be used for capital and project expenditure, refinancing of existing debt and for general corporate purposes.
UBS acted as the sole global coordinator of the trade as well as joint bookrunner alongside Deutsche Bank.