UBS takes Surabaya property company on the road

Despite the struggles of other Indonesian high-yield deals in recent weeks, Pakuwon Jati readies its debut in the international high-yield market.
UBS has been hired as sole bookrunner for a dollar-denominated high-yield bond offering for PT Pakuwon Jati. It will be the debut offshore issuance for the Indonesian property company.

The deal has a B-/B2/B rating and will begin roadshows on Thursday (September 7) in Singapore, before heading to Hong Kong on the 8th and London on the 11th.

As yet the deal size has not been finalised but is expected to be in the $100 million to $120 million range.

Pakuwon Jati is an Indonesia-based property management company which is headquartered in Surabaya and operates the Tunjungan Plaza shopping centre, the Mandiri Tower office centre, the Sheraton Surabaya Hotel and Towers and the Laguna Indah housing and industrial estate.

UBS will have its work cut out for itself with the deal since - on the whole - the market is generally unfamiliar with the company.

Although listed on the Jakarta and Surabaya Stock exchanges since 1989, Pakuwon Jati is a small company with a market capitalisation of around Rp700 billion ($80 million) and reported revenues of Rp357 billion ($39 million) in 2005.

Of additional concern for the lead manager is the overall state of the market. Indeed, the market has been less than favourable to sub-investment grade deals from Indonesian corporates of late. Pakuwon Jati is the fourth company from Indonesia looking to access the high-yield market over the last month following deals for property holding company Noble Finance, Indonesian media and telco group Media Nusantara Citra and paper producer Fajar Surya Wisesa.

Yet none of these deals have yet closed. In fact Noble was pulled from the market, while Deutsche Bank is still shopping MNC and Fajar.

NobleÆs deal was being marketed with price guidance in the 11.5% area, and was a for Reg-S/144a deal meaning it had access to a greater number of investors. But it was still unable to price.

However, Noble had to endure a market that was in the midst of a summer holiday and had generally grown apathetic to Asian credits in the wake of the Ocean Grand debacle.
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