SGD New Issue Review : Protelindo Finance 10Y 3.35%
NEW ISSUE: PROTELINDO FINANCE B.V. SGD 10 YR – INITIAL GUIDANCE 3.35% AREA
ISSUER: Protelindo Finance B.V.
GUARANTOR: Credit Guarantee and Investment Facility (“CGIF”), a trust fund of the Asian Development Bank
GUARANTEE OF THE BONDS: Payment obligations of the Issuer under the bonds are unconditionally and irrevocably guaranteed by the Guarantor, to the extent of, and in accordance with and subject to the terms of the guarantee.
ISSUE RATING: AA (S&P)
FORMAT: Reg S, S274 & 275 of SFA, registered form
TENOR: 10 years
INITIAL PRICE GUIDANCE: 3.35% area
ISSUE SIZE: TBD
(i) Make-whole call at issuer’s option on any interest payment date at SGD SOR+30bps
(ii) At issuer’s option for taxation reasons at par
(iii) At CGIF’s option upon CGIF acceleration event at par
PAYMENT: Semi-annual, actual/365 (fixed)
DETAILS: SGD250K/English Law/Euroclear and Clearstream
SOLE FINANCIAL ADVISOR: DBS Bank Ltd.
JOINT BOOKRUNNERS: DBS Bank Ltd. and Oversea-Chinese Banking Corporation B&D: Oversea-Chinese Banking Corporation
TIMING: As early as today
– Initial Guidance announced at 3.35% area for Protelindo (CGIF guaranteed) 10Y SGD transaction. Issue is rated AA by S&P
– This will be a 10Y bullet transaction with a make-whole clause at SOR+30. The 5yr call option has been dropped to reflect its investment grade issue rating and market norms and precedents for IG paper.
– This is on the back of very significant anchor IOIs from real money asset
managers and insurance accounts following a roadshow conducted on Monday
– Expected and maximum issue size is S$170 – 180M (US$quivalent) and is capped by the guarantee amount from CGIF.
– Timing: Today’s Business
SingPower 3.14% 08/31/22 Aa2/AA 102.0 2.85% SOR+69
SingPower 4.76% 05/15/24 Aa2/AA 113.0 3.16% SOR+84
PSA 3.385% 04/28/20 Aa1/AA 105.8 2.24% SOR+46
10Y interest rates 2.42/2.39 today.
3.35% = credit premium of 0.93% for 10 years.
Guarantee means we ignore the issuer and just go straight to CGIF, the trust fund of the ADB which is rated AA and the max guaranteed amount is US140 mio.
CGIF is then guaranteed by the ADB.
I drew out the supra yield curve in USD to get a rough sense of where 10Y is valued.
10Y is around 2.71% but this includes good and bad supras (eg the single A ones).
ADB is paying a credit premium of 0.8% for 9 years, just plucking their 07/2023 issue for comparison.
HDB 2.505% 06/2024, unrated, is yielding about 3%.
This bond is paying more because it is Protelindo but CGIF will be making the payments to the bondholders within 15 days if the issuer fails to do so. CGIF is managed by the Asian Development Bank (Aaa/AAA) which is owned by 67 member countries, Japan, US, China, India and Australia having the largest shares. http://en.wikipedia.org/wiki/Asian_Development_Bank