SGD New Issue: Indorama 10y 3.73% (195 mio)

INDORAMA VENTURES PCL – SGD CGIF G’TEED BONDS – YTM 3.73%

 

Deal Summary

ISSUER IVL Singapore Pte. Ltd., a subsidiary of Indorama Ventures Public Company Limited (“IVL”)
GUARANTOR Credit Guarantee and Investment Facility (“CGIF”), a trust fund of the Asian Development Bank
CGIF Guarantee (i) CGIF will irrevocably and unconditionally guarantee to the trustee the full and punctual payment of each Guaranteed Amount which covers any principal amount and any scheduled interest which is overdue and unpaid by the Issuer, any additional accrued interest and any trustee expenses.

(ii) The Guaranteed Amount does not include and the CGIF Guarantee will not cover any amounts that become payable under the Bonds on an accelerated basis at the instigation of the Issuer.

ISSUE RATING AA (stable) by S&P
FORMAT Reg S, S274 & 275 of SFA, registered form
YTM 3.73% (the number)
ISSUE SIZE TBD
EARLY REDEMPTION (i) At issuer’s option for taxation reasons at par

(ii) At CGIF’s option upon CGIF acceleration event at par

PAYMENT Semi-annual, actual/365 (fixed)
DETAILS SGD 250k / English Law / CDP
LISTING SGX-ST
JOINT BOOKRUNNERS CIMB and UOB
B&D UOB

 

Thoughts

This is the 3rd guaranteed bond CGIF has brought to the market.  Before this, we had Kolao in Aug 2014 and Protelindo (click here for previous review) in Nov 2014. The key difference between this and Protelindo, is that the make whole provision was removed from this issue, and there are provisions for acceleration if the issuer (Indorama) changes the terms of the bond without the Guarantor’s consent.

Scanning the SGD Corporate universe for AA names, I came up with the following comparable bonds:

At 3.73% (credit premium of 0.83%), the bond is roughly inline with where Protelindo 10y priced in terms of credit premium. The Protelindo is currently indicated at 3.45% (credit premium of 0.61%), which makes Indorama cheap at first glance. The consolation for buyers of Protelindo on spreads, is that Indorama did not print wider. The main consideration is liquidity (link) – i.e. will you be shown a price when you need to sell, and duration, especially so in a rate-rising environment. Good luck!

Comparable Yield Curve

SGD New Issue: Indorama 10y 3.73% (195 mio) 2

Comparable Credit-premium Curve

SGD New Issue: Indorama 10y 3.73% (195 mio) 1