COUNTRY REPORT JAPANrelease from MUFG on August 5. The
conventional and Islamic tranches each
have 10 and 15-year tenors.
Pertamina EP Cepu, a strategic subsidiary
for Pertamina, is the guarantor and project
finance sponsor, while Jambaran-Tiung Biru
Trustee is the borrower.
The JTB project involves the development
of proven gas reserves as well as the
construction and operation of gas
production and processing facilities in East
Java, Indonesia.
The gas project has a production capacity
of 192 million standard cubic feet per day,
while the JTB field has 2.5 trillion cubic feet
in reserves. The project is estimated to start
production in 2021.
› PTPN EXERCISES GREENSHOE
PERKEBUNAN NUSANTARA III (PTPN) has increased
a two-year offshore maiden loan to
US$390.6m after attracting 17 banks in
general syndication.
Sumitomo Mitsui Banking Corp was the sole
mandated lead arranger and bookrunner of
the deal, which was launched at an initial
target size of US$200m. Signing will take
place soon.
The deal paid a top-level all-in pricing of
207bp (offshore) and 227bp (onshore) based
on interest margins of 180bp (offshore) and
200bp (onshore) over Libor, respectively. It
has an average life of 1.65 years.
Funds are for working capital purposes.
The deal is unsecured as all offshore
currency loans to Indonesian state-owned
enterprises are bound by the World Bank
Negative Pledge, which prevents lenders
from securing the assets of state-controlled
entities or projects.
In the case of the PTPN loan, lenders will
have access to cashflows receivable from
quality credit counterparties, as well as
recourse to PTPN.
In March 2017, Perkebunan Nusantara V
raised a Rp4.866trn (US$363m) 10-year loan.
Bank Mandiri, Malayan Banking and Bank
Central Asia were the MLABs on that deal,
which offered an interest margin of 315bp
over Jibor, according to LPC data.
State-owned PTPN, which regularly
taps the Indonesian rupiah market, is a
producer of palm, rubber, sugar and related
commodities.
For full allocations, see http://www.ifrasia.com.
RESTRUCTURING
› S&P DOWNGRADES DMDT AGAIN
S&P last Thursday cut its rating on DELTA
MERLIN DUNIA TEXTILE and its US dollar bonds
to CC from CCC–, after the company asked
lenders to modify the terms of a loan.
The Indonesian textile company
sold US$300m 8.625% bonds in March,
but they plunged in July after a sister
company missed a payment on a loan. S&P
subsequently cut DMDT’s ratings to CCC–
from BB– and Fitch to CCC– from BB–.
DMDT asked the lenders of its US$160m
syndicated loan for an extension on
payment of the amortised principal due in
September and December this year. The
company is proposing to make repayments
from June 2020 and has also asked for a
lower interest rate on the loan.
S&P said that restructuring the loan would
constitute a distressed exchange. It will lower
DMDT’s rating to SD for selective default if
the proposed changes to the loan are made.
The bonds were bid at a cash price of
30.5 on Friday, according to Refinitiv data.
“A company that does a lot of its
transactions with related parties, has no
financial statements at the group level and
is audited by a non-Big Four auditor is about
the least transparent you can get,” said a
DCM banker away from the deal.EQUITY CAPITAL MARKETS
› KIMIA FARMA PLANS RIGHTS ISSUEState-owned pharmaceutical company
KIMIA FARMA said it plans to sell up to 1.57bn
rights shares.
The company will seek shareholder
approval on September 18 and the issue
will be launched within 12 months if it is
approved.
At the August 14 close of Rp3,100,
the rights issue would total a maximum
Rp4.9trn (US$341m).
The funds will be used to expand the
company’s pharmaceutical business.
The Indonesian government owns 90% of
Kimia Farma and the free float is only 5.5%,
according to Refinitiv data.JAPAN
DEBT CAPITAL MARKETS
› INDONESIA'S PLN PLANS YEN BOND DEBUTIndonesia’s state power company
PERUSAHAAN LISTRIK NEGARA, rated Baa2/BBB/
BBB, is planning a yen-denominated bond
issue, three sources told IFR.
PLN met Japanese investors last month
ahead of its debut deal in yen, two of the
sources said.While the issuer is not a familiar name in
the Japanese bond market, banks including
Japan Bank for International Cooperation
have long supported the country’s power
projects from which the issuer buys
electricity.
PLN is expected to start marketing its
bonds as early as this week, according to
one of the sources.
Last Friday, PLN was assigned a BBB foreign
currency long-term issuer rating by JCR.› SHIZUOKA PRICES FIVE-YEARSHIZUOKA PREFECTURE, rated A1/AA+ (Moody’s/
R&I), priced US$100m five-year notes via
sole lead Nomura, according to DealWatch,
IFR’s sister publication in Japan.
The new bonds carry a 2.20% coupon
and yield 71bp over mid swaps. The lead
manager did not disclose an equivalent
level in yen, but bankers away said
the spread over US dollar swaps was
equivalent to only a few basis points
over yen offer-side swaps and a negative
coupon.
This is beneficial for the issuer, which,
along with other muni governments,
recently printed five-year yen bonds with a
0.005% coupon.
The new bonds were sold to Japanese
investors, such as life insurers, trust banks
and regional accounts.
This is Shizuoka’s second US dollar bond
offering. The issuer, located about 180km
southwest of Tokyo, first sold US dollar
notes in November and Canadian dollar
bonds later the same month. Nomura led
the US dollar tranche, while Goldman Sachs
led the Canadian dollar tranche.› JAPAN STUDENT BODY GETS BOJ SUPPORTJAPAN STUDENT SERVICES ORGANIZATION (JASSO)
priced two-year notes at a negative yield
last Friday, fresh evidence that pressure on
yields from synchronised easing by global
central banks is spreading further into the
domestic credit market.
The issuer, an independent agency which
offers student scholarship programmes,
has become the first independent
Japanese entity to sell domestic bonds at a
negative yield other than the government
and issuers whose bonds come with a
government guarantee.
A ¥30bn (US$281m) two-year note with a
coupon of 0.001% priced at 100.003 to yield
-0.0005%.
JASSO, rated AA/AAA by R&I/JCR, had
marketed the bonds at price guidance of
either 100.003 or 100.002. The latter would
have been an approximately zero yield, and
this is where it printed the past 12 two-year
issues.