Lodha Developers of India succeeded in its second attempt to tap the offshore bond market, but it has to pay the price to print its inaugural US$200 million offering.

The Ba3/B+ rated company priced on March 5 the Reg S five-year non-call three deal at par with a similar coupon and re-offer yield of 12%, the highest ever paid by an Indian high yield corporate. The bonds struggled in the early secondary market trading on March 6, dropping by a point, but staged some recovery in the afternoon.

The transaction was launched on the back of a two-team deal roadshow on March 4 in Singapore and Hong Kong where Lodha Developers met with over 40 investors through one-on-one meetings and group luncheons.

Leveraging on the anchor interest from investors, the arrangers announced the deal during the Asia morning on March 5 with an initial price guidance of 12% area. At the close of the Asian trading session, the final guidance of 12% was released to the market.

Lodha Developers initially tried to access the international bond market in December 2014, but decided to postpone the transaction due to adverse market conditions.

In terms of comparables, the investors were referred to the existing 2019 bonds by Rolta India, which were trading at yield-to-worst (YTW) of 9.152% before the deal announcement. Other references were Greenko Group and Indiabulls Real Estate, which likewise have outstanding 2019 bonds, which were trading at YTW of 9.411% and 11.802%, respectively.

The net proceeds from the transaction – less approximately US$7 million to be used to repay the parent guarantor Lodha Developers Private and Lodha Crown Buildmart Private directly – will be invested in Lodha Developers International Holdings.

About US$242 million will be returned to Lodha Developers Private to refinance existing indebtedness, while the balance will be retained by Lodha Developers International for general corporate purposes outside India.
Barclays, CLSA and J.P. Morgan were the joint bookrunners for the transactions.

Established in 1980, the privately-held Lodha Group is the leading real estate developer in India. It is currently developing an estimated 43 million sq ft of prime real estate in Mumbai metropolitan region and has 28 ongoing projects across London, Mumbai, Pune and Hyderabad. – CS