Hoang Anh Gia Lai became Vietnam’s first fully private-sector borrower to issue in the dollar bond market on Wednesday night when it priced a $90 million high-yield deal.
The company, which is headquartered in Pleiku City, has interests in a hodgepodge of businesses including residential property development, hydropower generation, iron ore mining and rubber plantations in Vietnam, Cambodia and Laos.
The coupon for the five-year non-call-three was fixed at 9.875% and the notes were reoffered at 96.181 to yield 11%. Credit Suisse was a sole bookrunner.
While small in size by the standards of the international bond market, Hoang Anh’s issue stands out from the government-linked borrowers that have so far issued dollar bonds from Vietnam.
It is also the first Vietnamese credit to tap the G3 markets after news emerged late last year that state-owned shipbuilder Vinashin was having problems servicing its debt. Subsequently, investors looked askance at any debt from Vietnamese state-owned companies, including Vinacomin, which was forced to pull its planned dollar offering in November.
Hoang Anh completed a non-deal roadshow in March, but held off launching a trade until Wednesday night. Vietnamese credit default swaps, which had swelled to 400bp in February, have calmed down somewhat of late and were recently trading inside 300bp.
The deal size was announced at $75 million in response to a reverse enquiry, but ended up raising slightly more than that. Funds, banks and private banks took part in the deal, but the company released few other details on the order book. There was no secondary trading in the bonds yesterday morning as they were held in the hands of a small number of investors.
The bond will amortise by 20% of the principal amount each year in 2014 and 2015, and 60% in 2016 when the bonds mature. Investors were keen that the company pre-pay some of its debt before maturity and the amortisation schedule also coincides with the ramp up of the company’s hydropower business.
The notes are callable on May 20, 2014 at 104.9375 and on May 20, 2015 at 102.4688. There is a make-whole call at Treasuries plus 50bp.
The deal reflects that there is liquidity, albeit thin, for Vietnamese credits. “There is a pool of investors that are comfortable holding Vietnamese credits. Investors were interested in participating as they know there is a finite number of corporates that can issue bonds in Vietnam,” said one person familiar with the deal, adding laconically that there is little threat of further supply from Vietnamese issuers.
While Asian G3 bond markets are experiencing a renaissance of sorts, with borrowers of every hue tapping the market, dollar bond issuance out of Vietnam has been in a comatose state since Vinashin’s woes hit the headlines. As such, there was a dearth of comparables for the deal.
The proceeds will be used as capital expenditure for Hoang Anh’s rubber and hydropower business, and for working capital purposes. The Reg-S bonds were rated single-B by Standard & Poor’s and Fitch.
Debt pipeline builds
Indonesian state-owned oil company Pertamina’s long voyage to the international bond market is finally poised to draw to an end. The company concludes roadshows for its debut dollar benchmark today and is expected to tap the market with a deal of about $1 billion next week. The tenor is likely to be 10 years. Citi, Credit Suisse and HSBC are joint bookrunners.
The deal marks the resurrection of a mandate that is about a year old, though Pertamina has harboured ambitions of testing the bond market since as far back as 2003, when it held a bake-off to choose bookrunners.
There was previously talk that Pertamina had wanted to issue an unrated bond and that it was taking a long time getting its financial results audited. This time round, the company has had its proposed issue rated at BB+ by Standard & Poor’s and Fitch.
Based on feedback from investors, the Indonesian credit is likely to attract good demand as it is a refreshing change from the usual China high-yield names to hit the market. Recent Indonesian bonds have been well received for precisely this reason, including the sovereign that last month priced its $2.5 billion 10-year bond — and is the closest comp for Pertamina — as well as Indika Energy.
Elsewhere, China Shanshui Cement has mandated Barclays Capital, Credit Suisse, Deutsche Bank and Standard Chartered Bank for its proposed dollar bond. The company completes roadshows next week.
China Resources Land was due to price its five-year dollar benchmark late last night. HSBC is a sole global co-ordinator and bookrunner. BOC International and DBS are joint bookrunners.
