Asia ex-Japan G3 bond issue pipeline

SINGAPORE: The Republic of Philippines is preparing a twin offer of Global peso and dollar bonds totalling up to US$3bn, with proceeds to retire up to US$2.5bn of outstanding bonds as part of its debt management programme.

A portion of the total proceeds would fill Manila's remaining US$500mn external financing requirement this year, a source told Reuters.

The central bank's policy-making Monetary Board has already approved the sale of up to US$1.5bn in 15-year Global peso bonds and as much as US$1.5bn in a new 25-year dollar bond or a reopening of a US$1bn due October 2034, according to a source who has seen documents on the bond sale.

Citigroup, JP Morgan, Goldman Sachs, HSBC, Standard Chartered and UBS have been short-listed for the mandate, which is expected to be awarded soon.

Deutsche, HSBC and UBS were the leads on the due 2034 bonds, which priced at the time 99.382 and a 6.375pc coupon for a 6.425pc yield, or 216.5bp over Treasuries. The bonds are trading in secondary markets at a cash price of 118-119 or a yield of around 5pc.

The RoP, one of Asia's most active sovereign issuers of foreign debt, would likely precede with the planned debt sales as early as September, when investors return from their holidays.

The Monetary Board's go-ahead was an approval in principle of an urgent request from the government, the source said, with the plan to go through a final approval process later.

South Korea's Hana Bank priced its second Samurai offering, a JPY30bn (US$389m) 2s/3s two-part trade through joint leads Daiwa Capital

Citigroup, Daiwa CM and Nomura were joint leads. India's Ballarpur Industries is pressing ahead with its US dollar hybrid bond having released guidance at 9.75pc. Interestingly, Bilt is raising funds through a perpetual offering - India's first such dollar borrowing with an undated maturity.

The Reg S/144a perp is similar in structure to Tata Power's USD450m 8.5pc 60-year non-call 5 bond via Deutsche Bank, Goldman Sachs and UBS in mid-April - the only other foreign currency hybrid bond from India.

Tata Power's Reg S-only hybrid priced at the tight end of 8.50pc-8.75pc guidance at the time, equivalent to 641.4bp over US Treasuries or 622.6bp over mid-swaps. The deal garnered a US$3.5bn book from more than 200 investors.

HSBC and RBS are the leads on Bilt's perp, which features a reset after year 5 and a 100bp step-up after year 10, if not called.

Ballarpur International Graphic Paper Holdings, a unit of Bilt, is the borrower. BIGPH is rated BB- by both Fitch and S&P, which have assigned a 50pc equity credit to the perp for ratings purposes. Tata Power's hybrid also received similar equity treatment. Tata Power is rated Ba3/BB- (Moody's/S&P).

The perp marks Bilts offshore bond market debut and is said to be eyeing a US$300mn size. Bilt will use the bond proceeds to fund its US$695mn expansion of Malaysian subsidiary Sabah Forest Industries

Indian Railway Finance Corp will commence a roadshow for its US$200mn Reg S bonds on Friday and take in Hong Kong, London and Singapore.

Bank of America Merrill Lynch, Barclays Capital, Citigroup, Deutsche Bank and JP Morgan are the leads on the deal, which was mandated in mid-June.

The offering marks IRFC's return to the offshore bond markets after four months. In late March, it raised USD200m through a five-year Reg S offering via sole lead BofA Merrill. That deal priced at par and a coupon/yield of 4.406pc, equating to a spread of 220bp over US Treasuries.

IRFC has also mandated seven banks for a US$200mn loan, expected to launch into general syndication soon. BofA Merrill is the only one of the above-mentioned banks to figure on the dollar loan, as well.

Copyright Reuters, 2011