New Issue Review : Tata Steel 10Y SGD & Raffles Education 5Y

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## NEW ISSUE: Tata Steel S$ 10Y – Initial Guidance 5.25% area ##

Issuer:               ABJA Investment Co. Pte. Ltd.
Guarantor:        Tata Steel Limited
Structure:          Fixed Rate Senior Unsecured Notes
Issue rating:      Unrated
Guarantor rating:     Moody’s: Ba3 (Negative) / S&P: BB (Negative) / Fitch: BB+                       (Negative)
Format:              Regulation S
Tenor:                10 years
Size:                    SGD Benchmark
Initial Guidance:     5.25% area
Change of Control:    Change of Control put at 100%, if (1) persons other than those controlling the Guarantor as of the Closing Date, acquire >50% of Voting Rights in the Guarantor, and a Ratings Decline occurs; (2) the Guarantor consolidates with or merges into or sells or transfers all or substantially all of its assets, and a Ratings Decline occurs; (3) the adoption of a plan relating to the liquidation or dissolution of the Guarantor; or (4) the Guarantor ceases directly to own 100% of the share capital of the Issuer or adopts a plan relating to the liquidation or dissolution of the Issuer
Details:              S$ 250k x S$250k / English Law / CDP / SGX Listing

Good news. GIC has a 1.77% stake in the guarantor. And it is 18th biggest company on the NIFTY Index. The Life Insurance Corp of India has a 15% stake too.

Bad news. I am not entirely sure but I see some headlines in Jan about a bond issue and a ticker created for it for a 10Y USD bond at 9.5% which could point a potentially unsuccessful bond issue then. This is unverified, of course.

And headlines have not been very kind to them.

Tata Steel Q3 net loss widens, misses estimates

The consolation is that this company is going to be around for a while and this bond issue will be a massive windfall for them given that banks are charging them the moon to borrow money.

“In its first overseas funding raising in nearly three years, TATA Steel has begun roadshows to raise USD 750 million in Singapore.

A company official who wished not to be named confirmed that the company is beginning roadshows to raise USD 750 million. The coupon rate or the duration of the bond maturity is unknown but the official said that it is expected to be a 10 year bond issue. When contacted, TATA Steel declined comment.

The fundraiser will take place through TATA Steel’s Singapore based wholly owned subsidiary Abja Investments.

The company is expected to use this money for its 6 million tonne INR 35,000 crore Odisha steel plant and to part pay its humongous debt.”

Source – India Infoline (www.steelguru.com)

Why Singapore ?

Well. Singaporean investors are usually less discerning, I suppose. Then again, Singapore has a huge population of expatriate Indians and is the base for many an Indian investor.

Question to ask : Is 5.25% enough for the 10Y  risk you are taking ? (10Y interest rate is at 1.7% today). How low can its yield go for a BB/Ba3 company on negative watch ?

Did you ask yourself the same question when you bought Olam 10Y at 6% ?
And where will the Indian soya company Ruchi come out at ?
And what about Trikomsel coming next week ?

“****TRIKOMSEL PTE LTD: SGD MANDATE ANNOUNCEMENT****
Trikomsel Pte. Ltd., a wholly owned subsidiary of PT Trikomsel Oke Tbk, has appointed ANZ and J.P. Morgan as Joint Global Coordinators, and ANZ, J.P. Morgan and Standard Chartered Bank as Joint Lead Managers and Bookrunners, to arrange a series of fixed income investor meetings in Singapore commencing 25 April 2013.  A SGD-denominated Notes issuance in Reg S format may follow, subject to market conditions.” Bloomberg

Case closed.

***

Raffles Education comes back to haunt us !

*** Raffles Education 5-yr Senior Unsecured – UPDATE #1 **

–    Raffles Education announced new SGD issue on the back of strong reverse
enquiry
–    Tenor: 5yrs, IPG: 6.25% area

–    Raffles Education is one of the largest private education providers in the
Asia Pacific region and currently operates 33 Colleges and Universities in
30 cities across 13 countries in the Asia Pacific region as at 31 Dec 2012

Nice PB rebate for this one.

Wrote about them in Feb and my view has not changed.

And by the way, 57% of Courts went into PB accounts.

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