may have cost as high as 4% for the issue but
given the changes in market conditions,
especially a much lower US Treasuries yield,
it saved more than 100bp in terms of
funding cost.”
BoCom HK’s AT1s opened weak at
99.75/100 last Wednesday but then
rebounded to 100.05-100.2 later that
morning.
The distribution rate of the AT1s will be at
an initial spread of 252.5bp over prevailing
lVE
YEARû4REASURIESûIFûTHEYûAREûNOTûCALLEDûONû
THEûlRSTûCALLûDATEûOFû-ARCHûûINDIA
LODHA TACKLES BOND MATURITYLODHA DEVELOPERS INTERNATIONAL has hired
banks to arrange investor calls ahead of a
proposed US dollar senior secured bond
offering, as a redemption looms.
Lodha Developers is a wholly owned
subsidiary of Indian property company
MACROTECH DEVELOPERS, which was formerly
known as Lodha Group.
Macrotech and Lodha Developers UK, the
ultimate holding company for the group’s
London assets, will guarantee the proposed
bonds, which are expected to be rated Caa1
by Moody’s.
JP Morgan, CLSA and UBS have been hired
to arrange calls with investors in Singapore,
Hong Kong and London, which began last
Thursday.
Moody’s downgraded Macrotech,
which is India’s largest property company,
in November to Caa1 with a negative
OUTLOOK ûFROMû" ûWARNINGûOFûRElNANCINGû
risks.
Lodha Developers has a 12% US$325m
bond guaranteed by Macrotech which is due
on March 13. In November, Fitch cut
Macrotech to CCC from B–, warning that it
had only raised around US$155m at that
time towards repaying the maturing dollar
bond. The company has been selling assets
INû)NDIAûANDûSECURINGûlNANCINGûAGAINSTûITSû
inventory in the UK.
In January, a spokesperson for Macrotech
said that it planned to raise about US$225m
from a new bond issue, following
discussions with investors.
However, it needs to gather a substantial
amount of cash before it can go ahead with
the new issue.
“In order to proceed with the bond
transaction, as a condition precedent,
THEûCOMPANYûMUSTûlRSTûRAISEû53M û
which will be deposited in an escrow
account,” wrote Sweta Patodia, a Moody’s
analyst.
“This amount, together with the proposed
bond issuance, will be used to repay theprincipal and interest associated with the
maturing US$324m bond.”
The company already has access to a
£86m (US$112m) inventory facility, secured
against unsold apartments at Lincoln
Square, one of Macrotech’s London projects,
but around £60m will be used to repay a
construction loan at the project, leaving just
US$34m for deposit into the escrow account.
It plans to raise the remaining required
amount for the escrow account from
US$55m in pending collections from sales at
Lincoln Square and a transfer of US$29m in
funds from its India operations.
“Any delays in receiving such proceeds
will result in a shortfall in the escrow
account and prevent the bond transaction
from progressing, increasing the likelihood
of default,” wrote Patodia, noting that
-ACROTECHûDOESûNOTûHAVEûALTERNATEûlNANCINGû
arrangements in place to repay the
maturing bond.
The outstanding bond was bid at a cash
price of 93.5 last Thursday, according to
2ElNITIVREC HIRES BANKS FOR LONG BOND)NDIANûPUBLICûINFRASTRUCTUREûlNANCEûlRMû
REC ûFORMERLYûKNOWNûASû2URALû%LECTRIlCATIONû
Corporation, has hired banks for a proposed
US dollar benchmark offering of up to 10
years.
Barclays, HSBC, MUFG and Standard
Chartered are lead managers as well as
bookrunners.
The 144A/Reg S deal will be drawn from
the issuer’s global medium-term note
programme.
Investor meetings and conference calls
took place in Asia, Europe and the US from
February 24. The company is rated Baa3/
BBB– (Moody’s/Fitch).SOUTH KOREA
KORES SKIPS KANGAROO FOR NOWKOREA RESOURCES (Kores) has delayed a
planned Kangaroo bond offering as market
sentiment has worsened due to a rise in
coronavirus cases in South Korea.
The state-owned company had intended
to price the deal on February 24 or 25 with a
target size of A$300m (US$197.3m),
ACCORDINGûTOûAû+ORESûOFlCIAL
The issuer has a US$350m note maturing
on April 29 and was planning to tap the
+ANGAROOûBONDûMARKETûFORûTHEûlRSTûTIMEûFORû
RElNANCINGûPURPOSES
“We have some time left until the
maturity of the existing bonds so found no
reason to come out now when the markets
LOOKûEXTREMELYûJITTERY vûSAIDûTHEûOFlCIALThe exact timing of when the company
will come back to the market, as well
as the currency of the deal, is yet to be
decided.
“We are re-examining our plan to raise
funds in Australian dollars now that we have
pushed it back. Options like issuing bonds
onshore as well as a US dollar offering are up
FORûDISCUSSION vûTHEûOFlCIALûSAID
Kores, rated A1/A (Moody’s/S&P),
mandated Citigroup, BNP Paribas and JP
Morgan FORûTHEûPLANNEDûTHREEûORûlVE
YEARû
debut Kangaroo issue and held investor
meetings and calls in Singapore, Hong Kong
and Australia in early February.
Separately, Kores priced a A$60m private
placement on February 14. BNP Paribas was
sole bookrunner.
The state of New South Wales last June
granted mining leases for a coal mine
controlled by Kores.
A US dollar deal by KOREA NATIONAL OIL
CORPORATION (KNOC), rated Aa2/AA/AA–, is
also in the pipeline. The state-owned oil and
gas developer has mandated banks to
RElNANCEûAû53MûBONDûDUEû-ARCHû û
but it said it has not been delaying the issue
due to uncertainties over the virus.
“We’ve been looking for the right time to
ISSUEûTHEûBONDSûFORûINTERNALûCASHmOWû
REASONS vûSAIDûAû+./#ûOFlCIAL
KNOC has hired Citigroup, BNP Paribas,
HSBC, UBS and KDB.EUROPE/AFRICA
BELARUS
SOVEREIGN LEAVES DIARY CLEARBELARUSûHASûANNOUNCEDûITSûWELL
mAGGEDû
mandate, bringing action to a CEEMEA
primary market blunted by the coronavirus
and market volatility.
The sovereign is keeping its timing
options open across US dollars and euros. It
said it is considering a 144A/Reg S dollar
benchmark 15-year tranche and a long six-
year or eight-year euro benchmark tranche
during the course of 2020.
"ELARUSIANûlNANCEûMINISTERû-AXIMû
Yermolovich said in January that Belarus
WOULDûAIMûFORûANûISSUEûINûTHEûlRSTûQUARTERûOFû
US$1bn-$1.2bn.
Citigroup, Raiffeisen Bank International and
Societe Generale are bookrunners and are
joined as leads by Renaissance Capital.
Belarus (B3/B/B) was last in the market in
early 2018, placing a US$600m 6.20%
February 2030 bond. That note is quoted at
4.93%, according to Tradeweb.International Financing Review February 29 2020 51EMERGING MARKETS EUROPE/AFRICA8 IFR Emerging 2322 p 45 - 54 .indd 51 28 / 02 / 2020 18 : 17 : 16