Jasa Marga launches new asset class for global bond investors
Indonesian state-controlled toll road developer and operator prices first Komodo bond
INDONESIA’s state-controlled toll road developer and operator Jasa Marga on November 30 priced the first ever global rupiah bond, called a Komodo bond, amounting to four trillion rupiah (US$296 million), thus introducing a new asset class in the global debt capital markets. Similar to the concept of dim sum bond or Masala bond, these notes are denominated in rupiah, but payments of principal and interest will be made in US dollars.
The three-year Reg S/144A deal was priced at par with a similar coupon and re-offer yield of 7.50%, representing a significant price compression of 37.5bp from the initial price guidance of the 7.875% area.
The landmark deal sets a new milestone as it enables Indonesian companies to issue local currency borrowings in the global debt markets to help their funding requirements, while mitigating vulnerabilities to exchange rate fluctuations.
The transaction was launched following a series of fixed income investors’ meetings in Asia, Europe and the US, during which Jasa Marga generated strong investor feedback and indications of interests. Utilizing the momentum, the company built a strong order book, allowing the arrangers to significantly revise the price guidance from the 7.875% area to 7.50% (the number).
The final demand amounted to over 15 trillion rupiah from 64 investors with 55% of the bonds sold in Asia (including 15% in Indonesia), 26% in the US and 19% in Europe. By type of investors, fund managers accounted for 84% of the paper, while the remaining 16% was bought by banks, public institutions and private banks.
The deal features a change of control put at 101%, if the Indonesian government ceases to control, directly or indirectly, at least 51% of Jasa Marga’s issued shares and the Class A Dwiwarna share.
The proceeds will be used to finance capital expenditures (capex), acquisition activities, working capital requirements and other general corporate purposes.
HSBC and Mandiri Sekuritas are the joint global coordinators for the transaction as well as joint bookrunners and lead managers along with Deutsche Bank and Standard Chartered. HSBC also acted as the sole ratings adviser.
Jasa Marga is a listed company which is 70% owned by the Indonesian government. Moody’s Investors Service, which assigned a first-time issuer rating of Baa3 to Jasa Marga, says the bonds could broaden the market access of Indonesian infrastructure companies, and its successful completion may provide greater funding diversity.
It notes that consistent with Indonesia’s plan to extend its toll road network, Jasa Marga has an active capex plan, which will take the number of toll roads in the company’s portfolio from 19 to 31, and almost double the toll road length to 1,260km from the current 665km during the next three to five years. This is equivalent to 63% of the country’s toll roads in operation by length.
In August this year, Jasa Marga raised two trillion rupiah after launching its first securitization, using the Jakarta-Bogor-Ciawi (Jagorawi) toll road as the securitized asset.
Other Indonesian companies have indicated their intention to launch Komodo bonds, including Wijaya Karya, one of the largest engineering, procurement and construction companies in Indonesia, which is owned 65% by the government and 35% by the public. The company has just obtained a first time rating of Ba2 from Moody’s, which says it would also benefit from the Indonesian government’s initiatives to accelerate infrastructure development in the country.
4 Dec 2017