At the same time, Berlian Laju Tanker (BLT), an Indonesian shipping company has also mandated JPMorgan, as well as Deutsche bank, on a $200 million seven-year non-call issue, rated B+/BB-. The roadshow for this deal will last five days and take in Hong Kong, Singapore, London and the US.
The Indika offering comes at a time of huge growth prospects for Indonesian coal companies, in light of ChinaÆs voracious energy appetite. Indonesian coal is significantly cheaper than Chinese coal because ChinaÆs extraction costs are high, especially in places where water is scarce. China's coal is also poor quality in some areas. As a result, the PRCÆs exports have declined since reaching a high of 70 million tonnes in 2003, and now the country is importing more than it is exporting, mainly from Indonesia and Australia. Its appreciating currency has also made imports more competitive.
When marketing the Indika bond deal this week, bankers will be pointing to two comparables. IndonesiaÆs largest coal producer PT Adaro has outstanding bonds due in December 2010 (8.5%) which are yielding 7.25%. The other is PT Berau CoalÆs December 2011 bullet (9.375%). These are yielding 7.75%.
BLT's deal, meanwhile, is expected to perform well. As the largest shipping company in Indonesia, BLT has an established track record and has shown resilience during downturns. The company announced in February that it planned to spend $460 million expanding its fleet to meet the rising demand for chemical and oil transport.
Investors wary of Indonesian companies after the 1997 crisis will take comfort in the fact that BLT derives 85% of its revenues from outside the country. However, despite an average fleet age of 10.6 years, investors are somewhat concerned about buying into subordinated debt (since the ships have mortgages on them).
In terms of comparatives, marine shipping company PT Arpeni Pratama Ocean LineÆs 2013s (8.750%) are currently yielding 8%.
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