The B2/B+ rated deal, carrying a bullet structure, was being marketed to investors at an indicative range of 10.75% to 11%. When the deal priced it came at the tight end of guidance at par with a coupon of 10.75 and a spread of 636bp over US treasuries.
When the new deal for Ciliandra opened in trading on Friday night, it quickly traded higher with a bid of 101% at the break.
The lead was able to upsize the deal by around 7% to $160 million on the back of a $700 million order book following an extended roadshow with a lot of one-on-one investor meetings. The borrower conducted 25 one-on-ones in Asia, a further 11 in London and 2 full days of meetings in the US. Notably, the deal had a hit rate of almost 100% from investors that attended the meetings.
The deal was split geographically with 65% heading to Asian accounts, 20% to US-based accounts and the remaining 15% to Europe. By investor type, 65% went to asset and fund managers, 30% to banks and 5% to retail.
Although, the market offers very little in the way of direct comparables for the deal, there has been a torrent of Indonesian corporates entering the market recently. Indonesian property company Lippo Karawaci has a B1 rated 2011 trading at 9.65%; tyre manufacturer Gajah TunggalÆs deal, a $325 million five-year B2/B deal, is trading at 11.15%; a $150 million three-year non-call one deal for B+/B1 rated Indonesian retailer Matahari is trading to yield at around 10.10%; and IndonesiaÆs second largest shipping company, B+/BB- rated Arpeni Pratama Ocean Line, has a $160 million seven-year non-call four deal, that is trading at 8.80%.
Ciliandra will use the funds for expansion and to repay approximately $80 million of existing debt as well as capex for a new bio-diesel plant, crushing mill and new plantings.
The notes have been structured to ensure that bond holders will have first claim over future revenues - after current expenses - from the company's existing palm oil operations as well as its proposed bio-diesel plant.
In its most recent ratings report, MoodyÆ s noted: ôthe favourable demand for crude palm oil and bio-diesel as well as Ciliandra's medium plantation quality and the upcoming positive maturity profile of its plantations, which will improve yield and provide support to the rating.
ôThe stable outlook reflects Moody's expectation that Ciliandra will continue to exercise a prudent financial policy - capex within the quantum of funds raised from the bonds and internally generated cash flow û in pursuing its growth strategy. Furthermore, the stable outlook is based upon the company's confirmation that the investigation of one of its founders and a former shareholder will have no material impact on its operation and financial profile.ö
Ciliandra is a private Indonesian upstream palm oil plantation company which operates in Sumatra. Overall, it maintains 13 palm oil plantations with 76,830 of aggregate planted hectares. Additionally it controls six palm oil crushing mills with a total capacity of two million tonnes of fresh fruit brunches.
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