Jababeka International, an Indonesian-based industrial developer, raised $190 million on Wednesday, exchanging its outstanding paper with the new issue to lower its cost of funds.
The five-year bond is callable in year three, with roughly $134 million in proceeds being used to redeem $175 million of bonds due in 2017, while the remaining $56 million of new cash raised will be used for general corporate purposes, according to sources close to the deal.
Jababeka’s new 144A/Reg S-registered offering was able to achieve a significant reduction in funding costs based on rarity factor, especially given the fact that the high-yield market continues to be dominated by Chinese real estate names.
“There has been strong interest for Indonesian high-yield deals,” said a source familiar with the matter, adding that the bond is guaranteed by its parent Kawasan Industri Jababeka and a few of its subsidiaries. “The lack of supply from the Indonesian high-yield space definitely helped.”
According to Dealogic data, there has only been $1.1 billion or nine high-yield transactions from Indonesia. This is miniscule when compared to the Asia ex-Japan high-yield market volume of $19.7 billion with 59 deals, of which China comprises 65%.
The developer replaced its existing five-year notes callable in year three, which were priced at 11.75% two years ago, with the new offering, which priced at 7.5%, indicating a hefty overall cost saving of 425bp, sources add.
In secondary markets, Jababeka’s bond continues to outperform, trading upwards from par to a cash price of around 101.75 on the bid side and 102 on the offer side, according to Bloomberg bond data.
The offering received a total orderbook of approximately $700 million from close to 70 accounts, with Asian investors subscribing to 80% of the paper, followed by an equal breakdown between European and US investors, according to a source on the deal.
Funds purchased 87% of the notes, followed by private banks with 10%, and insurers and others 3%.
Jababeka’s latest bond is the second Indonesian high-yield offering to hit international debt capital markets in a week. Indonesian automotive company Mitra Pinasthika Mustika raised a $200 million five-year note callable in year three at a yield of 6.75% last Friday.
Mitra’s Reg S-only bond — managed by Deutsche Bank — was also met with buoyant investor demand, obtaining an orderbook of more than $1.4 billion from over 110 accounts. Quality investors took part in the offering, of which 93% went to fund managers and the remaining into retail, said sources familiar with the matter.
Kawasan Industri Jababeka is the first publicly listed industrial estate developer in Indonesia. After listing in 1994, it has evolved into a fully integrated enterprise, offering a full range of real estate, infrastructure, logistics and leisure products and facilities.
Standard Chartered and UBS were the joint global coordinators and bookrunners of Jababeka’s B+ rated offering. Other bookrunners include JP Morgan.
