Pertamina, an Indonesian state-owned oil-and-gas company, visited the market for the third time on Tuesday with a $3.25 billion bond — the biggest US dollar bond from an Indonesian borrower on record, according to Dealogic.
The jumbo bond came at a busy time for debt markets in Asia, as well as globally, with Brazilian oil-and-gas company Petrobras selling an $11 billion bond on Monday and Apple selling a $17 billion bond last month — the biggest corporate bond ever.
Investors have piled into debt in recent times to beat low deposit rates. It was a similar story with Pertamina. The deal attracted $14.4 billion worth of orders across both tranches from a total of 667 accounts. Its latest deal generated the most amount of orders compared to previous issues and allowed Pertamina to broaden its investor base. It also suggests that the company has established itself as a borrower in the debt markets.
“The company came to market for the third time and printed at a lower premium over the Indonesia sovereign compared to previous issues,” says a source, adding that the 10-year bonds priced about 80bp wide of the Indonesia 2023s — lower than the high 90bp spread seen on previous Pertamina transactions.
Pertamina had first tapped bond investors in May 2011 with a $1 billion debut bond, ending a seven-year journey to the debt market. Shortly after that, it issued a 30-year bond and also returned last year.
The fact that the company did not choose to raise more might suggest that its jumbo bond concludes its funding needs this year. “We had more than enough demand to issue a bigger size, so if they had wanted to they could have issued more but chose not to,” says one source.
The $3.25 billion bond was split evenly between a 10- and 30-year tranche. The $1.625 billion 10-year bonds priced to yield 4.3% and the $1.625 billion 30-year bonds priced to yield 5.625% versus the initial guidance at the 4.50% area and 5.80% area respectively. Both bonds were reoffered at par. The Pertamina 2023s were trading at 100.375 and the 2043s were around par in secondary on Tuesday.
The comparables include Pertamina’s outstanding bonds maturing 2022 and 2042 as well as Indonesia’s latest 2023s and 2043s.
The 10-year bond attracted an $8.7 billion book and the 30-year tranche attracted $5.7 billion worth of orders. For the 10-year tranche, US investors were allocated 32%, European investors 39% and Asian investors 29%. Fund managers were allocated 76%, banks 9%, insurance 7%, private banks 4% and sovereign wealth funds 4%. For the 30-year tranche, fund managers were allocated 68%, banks 17%, insurance 8% and private banks 4%. US investors were allocated 40%, Asian investors 38% and European investors 22%. The bonds mature on May 20, 2023 and 2043.
The proceeds were for capital expenditure and general corporate purposes. Barclays, Citi and Royal Bank of Scotland were bookrunners.
