New SGD Issue Review : Trikomsel 3Y 7.875%

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Issuer:  Trikomsel Pte. Ltd.
Guarantor: PT Trikomsel Oke Tbk
Structure: Fixed Rate Senior Unsecured Notes
Issuer/Guarantor/Issue rating: Unrated
Format:  Regulation S; Singapore (Sections 274 and 275 of the Securities and Futures Act (Cap. 289))
Tenor: 3 years
Issue Size: Capped to SGD100 Million
Initial Guidance: 7.875% area
Change of Control: Change of Control put at 101%
Financial covenants: FCCR not less than 2.0x so long as Notes remain           outstanding
Listing: SGX-ST
Clearing: CDP
Denoms: SGD250k
Details: English Law / SGX Listing
Use of Proceeds:  Refinance a portion of existing borrowings
Joint Bookrunners:  ANZ, Deutsche Bank and Standard Chartered Bank
Timing: This week’s business; as early as today

– Initial Price Guidance: 7.875% area
– Issue Size: SGD100m (Capped)

TRIOIJ 5 ¼ 05/10/16 Corp   97.00/6.92%

They came last year at 5.25% for 3 years at the peak of their stock price and now with their stock price down 44% from the peak, the 3 year is costing them 7.875%.

trikomsel share price

My comments from last year :

I was wrong and the old Trikomsel 5.25% bond did not take off like wild fire because the coupon was cut down and the highest it ran to was 100.80 before crashing to a low of 93 (unverified) on just plain Indo fears before trending back up this year to its current 97 price.

Local Indonesian credit rating agency recently downgraded Trikomsel’s ratings giving them a stable outlook for their market foothold.

In an equity report, the company remains rated a buy with expectations of solid earnings ahead.

J.P. Morgan Bank Luxembourg SA. RE JP Morgan (51.7%),
Canopus Finance Limited (25.7%),
Standard Chartered Private Equity (13.5%),
Sugiono Wiyono Sugialam (1.2%), and
public (7.9%)

This explains their aggressive leverage stance and focus on growth (eg. Courts).  Private equity are slave masters and it is a relief bond holders  have the FCCR (fixed charge coverage ratio) covenant for protection.

I took a closer look at them recently during the Gallant issues, given their shared geography. Trikomsel appeared to me to be on higher ground despite their debt ratios and their ownership.

trikomsel revenuesTrikomsel Revenues

trikomsel liabilities and assetsAssets and Liabilities

Thus I remain cautiously optimistic on this name, as I was last year, risking the private equity exits when the time is right.

Just hope they will stick to their coupon level this time.