Jain Irrigation Systems, an Indian manufacturer of agricultural irrigation system and plastic products, raised $200 million from a five non-call three-year bond this week, becoming the first Asian issuer to sell a green bond in the dollar market this year.
The company added to a growing trend among Asian issuers of issuing green bonds. Some $37.6 billion was raised from 50 deals in Asia ex-Japan last year, compared to just $3 billion the year before, according to Dealogic.
Jain, rated B+/B+ by S&P/ Fitch, launched the maiden dollar bond issue a day after Vedanta Resources, an Indian mining and energy group, sold a $1 billion five-and-a-half year bond that drew more than $2 billion of orders.
Jain Irrigation’s deal got a smaller order book, generating $350 million of demand from 57 accounts. But that should come as little surprise. Vedanta is a London-listed, well-known company that has previously tapped the dollar bond market, whereas Jain is a first-time, high-yield rated issuer selling in a relatively novel format.
According to its recent financial results, Jain’s total revenues expanded at just 2% year-on-year to $928 million for the 12 months to March 2016, and its net profit rose to $13 million last year from $8 billion the prior year.
On Wednesday morning, the leads — Deutsche Bank and JP Morgan — approached investors with inital price guidance of “the 7.5% area”, before tightening guidance on the Reg-S deal to around 7.375% and finally pricing the deal to yield 7.375%. (The final pricing of the Feburary 2022 bond was 98.97, with a coupon of 7.125%.)
The bond can be redeemed after three years at par plus half of the coupon, and after four years at a quarter of the coupon. The first call date is February 1, 2020.
On Thursday afternoon, the bond was quoted at a secondary price of 98.95, slightly below the reoffer price.
Fair value of the bond was somewhere between 7.25% and 7.5% after taking similarly-rated Indian credits into account, said a syndicate banker on the deal. But there was no direct comparable for the issue, he said.
Reliance Communications, rated B+/B2 by Fitch and Moody's, is perhaps as close a comparable as bankers could get. The company has an outstanding 2020 bond, which was trading at 6.2% on Wednesday. Taking the two-year extension into account, Jain's bond should have priced at low 7%, the banker said.
Jain plans to use $150 million of the proceeds to repay its onshore rupee-denominated loans. The remaining $50 million will be used for refinancing its US dollar-denominated loans.
The bookrunners of the bond were Barclays, Nomura and Rabobank.
