Primary Credit Watch

DISCLAIMER : https://tradehaven.net/terms-of-use/

Recap of yesterday’s deals:

  • Central China Real Estate sells $300m long 5NC3 bonds at 8.75%, IPT 9.125% area, 1st HY bond in 1 mo.
  • Formosa Plastics sells $1b 10Y bonds at +157bp, IPT +180 area, its debut USD bond
  • Haitong Securities sells $670m 5Y bonds at +220, IPT +245 area, its 2nd USD bond this year
  • China Communications Construction sells $1.1b perp NC5 at 3.5%, IPT 3.8% area, its debut USD issuance

Today’s/Upcoming deals:

Malaysia to Sell $Bench 10Y, 30Y USD Sukuk

Issuer: Malaysia Sovereign Sukuk Berhad
10Y IPT +135bp area, 30Y +185bp area
Obligor: The Government of Malaysia
Obligor ratings: A3/A-/–
Exp. issue ratings: A3/A-/–
USD Trust Certificates, Sukuk Wakala
144A/Reg S
UOP: For govt of Malaysia’s general purposes, including for the redemption of $1.25b trust certificates due 2015
JBRs: CIMB, HSBC, StanChart

**Interesting to see the reception to this after the 1MDB mess.  With the Sukuk format, I feel that the deal should still have a decent take-up rate given the captive investor base.

INDUS GAS SGD 3YR – PX GUIDANCE AT LOW 8s

Issuer:   Indus Gas Limited
Guarantor:  iServices Investments Limited and Newbury Oil Company Limited
Issue:  Senior Unsecured
Ratings:  Unrated
Format: Regulation S only and S274/275 of SFA, SG; Issuance     off US$ 300 million Multicurrency Medium Term Note Programme
Issue Size: TBD
Initial Price Guidance:    Low 8s
Tenor:   3-Years
Coupon: Semi-annually in arrear, actual/365 (fixed)
Financial Covenants: 1. Consolidated Total Debt to Consolidated Equity     shall not: (a) at any time up to and including 31  March 2017 be more than 2.5; and (b) at any time   after 31 March 2017 be more than 2.0;
2. Consolidated EBITDAX to Consolidated Interest  Expense shall not: (a) at any time up to and including 31 March 2017 be less than 2.0; and (b) at any time after 31 March 2017 be less than 3.0;
3. Consolidated Tangible Net Worth shall not: (a) at any time up to and including 31 March 2017 be less than US$200 million; and (b) at any time after 31 March 2017 be less than US$400 million; and
4. Its ratio of Consolidated Secured Debt to Consolidated Total Assets shall not at any time be more than 0.50.
Interest Service Reserve Account: None
Change of Control: Change of Control put at 101%, Gynia Holdings       Limited and Focusoil Inc. Limited are together the beneficial owner of less than 51% of the total voting power of the Issuer, and other specified criteria in the offering circular of the Issuer
Listing:  SGX-ST
Details: SGD250K / Multicurrency Medium Term Note Programme /                     English Law
Clearing: Euroclear / Clearstream / CDP
Joint Bookrunners: DBS Bank Ltd.(B&D) and Standard Chartered Bank
Timing: This week’s business, as early as today

– New Indus Gas 3yr SG$ announced and deal is anchored
– Initial Price Guidance: Low 8s
– Issue Size: TBD
– Timing: As early as today

– Comps:
KRISSP6.25 06/17: 99.00, 6.50%
KRISSP5.75 08/18: 97.5, 6.59%

**Wow, an oil & gas name is actually back in the market!  This will be a true test of how much conviction investors have in the recovery of oil prices.  This is likely to be another ‘trade by appointment’ bond in the secondary market.  Having said that, an 8% coupon for 3 years might be too difficult to resist for some.