Asia debt markets turn to Malaysia's Tenaga
Asia debt markets turn to Malaysia's Tenaga
Dow Jones
Singapore
The Asian debt markets are this week turning their eyes to Tenaga
Nasional Bhd., Malaysia's national power utility, as a gauge of
sentiment toward international bonds.
"I wouldn't be surprised if we see other issuers check the
market this week. The market's looking a bit better but it's
still very tentative," said one syndicate banker.
Tenaga, 81 percent owned by the Malaysian government, heads
out on roadshows on Monday for a minimum US$250 million bond
offering to refinance the early repayment of $607.55 million in
2007 bonds.
Marketing kicks off in Hong Kong Monday, moves to Singapore
Tuesday and wraps up in London on Wednesday, with pricing
expected shortly thereafter.
Lead managers are Barclays Capital, Commerce International
Merchant Bankers Bhd., and Credit Suisse First Boston. The three
are also in charge of the buyback offer.
The size of the deal will depend on the extent of the buyback
-- Tenaga was seeking to repay a minimum of $300 million of bonds
early -- but given the spread Tenaga is offering, bankers expect
the takeup to be substantial and talk is now of a bond of up to
$500 million.
"I think the exchange portion should go well. You'd be crazy
not to accept the offer. And the new deal should have some
natural demand," said a banker not involved in the deal.
"By extending tenors, you are going to get a pretty decent
pickup."
Tenaga is offering to repay the $107.55 million of 7.200
percent notes due April 29, 2007 and $500 million of 7.625
percent notes also due April 29, 2007 at a spread of 15 basis
points over U.S. Treasurys.
When this offer lapses at the end of Monday, Tenaga will pay a
price 3 points lower.
Tenaga -- which has over 30 billion ringgit in debt with about
half denominated in foreign currencies -- has said it embarked on
the exercise as part of a long-term effort to manage its
liabilities.
Market talk suggested investors are being shown levels of 125-
130 basis points over U.S. Treasurys, or around 80-85 basis
points over the London Interbank Offered Rate, although that
differential is expected to shrink to closer to 75 bps over Libor
if demand proves strong.
"I'd say fair value is at 68-70 basis points (over Libor) but
in this market, you may have to offer a little more," said a
banker
Tenaga's 2011 bonds are currently trading around 50 bps over
Libor while its 2025 paper is around 105 basis points over.
Standard & Poor's Ratings Services has assigned a BBB rating
to the unsecured note offering while Moody's Investors Service
has ranked the bond at Baa2.