Gajah Tunggal Bond Top Up Attracts $1 billion

According to news published in Finance Asia, Indonesia’s PT Gajah Tunggal re-opened its July 2010 bond programme on June 4, pricing US$95 million worth of 10.25 per cent guaranteed senior unsecured notes through financial services groups Credit Suisse and Lehman Brothers. The B2(stable)/B(positive) Reg-S transaction (a transaction conducted without registration under the US Securities Act) attracted orders to the tune of $1 billion.

The re-opened bonds priced at 102.75 (yielding 9.2 per cent), in contrast to the existing bonds, which as of June 4 traded at 103.125 or 9.07 per cent. The new issue price equates to a yield spread of 423.9bp over two-year Treasuries. The transaction tapped the company’s existing $325 million bond programme due to mature in 2010, raising the total size of the programme to $420 million.

In terms of geographical split, 73.4 per cent of the bonds sold to Asia, 16.6 per cent to Europe and 10 per cent to US offshore accounts. Investor-type breakdown was not available. The proceeds will be used to fund the company’s motorcycle tyre and radial production expansion, as well as providing research and development facilities.

The company also received an improved credit rating, with Standard & Poor’s revising its outlook from stable to positive, and assigning a B rating to the June 4 bonds. According to the report, the company’s Ebitda margins in 2006 fell to 12 per cent from 14 per cent in 2005.