New SGD Issue Review : Trikomsel 3Y 7.875%
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NEW ISSUE: TRIKOMSEL PTE. LTD. SGD 3YR SENIOR NOTES
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)
COMPARABLE BONDS :
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%.
My comments from last year : https://tradehaven.net/market/new-issue-review-trikomsel-sgd-3y/
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. http://m.bisnis.com/en/read/20140310/110/25674/pefindo-revised-trios-rating-to-ida-
In an equity report, the company remains rated a buy with expectations of solid earnings ahead.
Shareholders
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 Revenues
Assets 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.
Don’t think many banks are offering leverage on this one.
I was surprised to learn they did for the old one.
Will price tomorrow.
Order books are supposedly well covered already and I am not the least surprised because they are paying 3 times as much fees as Ezion and just as much as Vallianz !
FINAL GUIDANCE: TRIKOMSEL PTE. LTD. SGD 3YR SENIOR NOTES
* Final Price Guidance: 7.875% (the number)
* Timing: Today’s business, orderbooks subject @ 11:30am HKT/SG
Coupon unchanged…. looks like there is no love for private equity
Trikomsel 7.875% mkt price 99.75/100.00
Dear TH,
Thanks for the coverage on this issue.
I am intending to sell Olam perpetual 7% at 104.75 and immediately buy Trikomsel 7.875% at 99.80. The price are quoted by my banker. Is it a reasonable trade?
I was worried over interest hike driving down the perpetual security. And 3 YR issue with slightly higher coupon look like a suitable replacement. Understand the credit rating of these two company cannot be compared.
What is your thought on this? Thanks for your view 🙂
I am not as bearish Trikomsel as some others are. Their concerns are valid on the high yield sector as a whole especially those on an expansion spree like Trikomsel whereas Olam is in consolidation mode and backed by Temasek. Trikomsel is backed by flippant venture capitalists much as Courts is.
Diff sectors too – which is more applicable for equity analysis and retail in Indonesia, I favour. Yet I believe that agriculture is in for a tough summer and months ahead.
If we examine the old Trikomsel’s prices during the mini meltdown of last year, the yield did not really rise past the current coupon levels and for that, I believe that there is value in the 7.875% coupon.
As for timing, I am not sure if you will find a better time to buy the paper as euphoria in Indonesia is waning and mood is souring slightly amongst the real money investors. The same goes for Olam and their ops in Thailand.
You should view them both as separate trades instead of a switch.
Trikomsel 7.875% 98.75/99.25
Softbank has just acquired 19.9% of Trikomsel.
I think their bonds’ prices has just gone up.
And also cos of this … http://www.straitstimes.com/news/business/companies/story/singpost-and-trikomsel-joint-venture-tap-ecommerce-opportunities-indon
TRIKOMSEL 7.875% 2017 97.00/99.00 (last week 95/97)
TRIKOMSEL 5.25% 2016 98/99 (last week 95.50/97.50)
Hearing 98.50 bid for both now .. no more offers.
Hi TH,
Thank you so much for your price updates.
Nice to know that their prices are edging near to par.
Yes. Finally.
I don’t know why it fell so much before though… not many reasons for it to…