Bumi resources meets investors for bond sale
Bumi resources meets investors for bond sale
Shanthy Nambiar, Bloomberg, Jakarta
The mining units of PT Bumi Resources, Indonesia's biggest coal
exporter, are meeting investors this week to gauge demand for the
planned sale of US$600 million of bonds, a Bumi official familiar
with the offer said.
The bonds will be sold by Bumi's financing unit Indocoal
Exports (Cayman) Ltd. on behalf of PT Arutmin Indonesia and PT
Kaltim Prima Coal, said the official, who declined to be named.
The bonds may be priced in New York in the week of June 20 after
meetings with investors in Asia, Europe and the U.S.
Indonesian borrowers including PT Indosat, the nation's
second-biggest phone company, are taking advantage of a decline
in borrowing costs during the past three weeks, as concern eased
that General Motors Corp. and Ford Motor Co. would swamp the
market for high-yield debt.
"Everyone is trying to pick the lowering in the yield," said
Desmond Soon, who manages $200 million of debt at Pacific Asset
Management in Singapore.
"High-risk paper is coming back, but slowly."
The yield on the benchmark 10-year U.S. Treasury note due May
2015 was 4.08 percent as of 9:15 a.m. in Singapore, according to
Cantor Fitzgerald LP, a New York-based bond broker.
Merrill Lynch & Co. will manage the bond sale with the help of
Jakarta-based PT Danatama Makmur Sekuritas. R.G. Rosso, Merrill's
spokesman in Hong Kong, declined to comment. Peter Tabalujan,
spokesman at Bumi, also declined to comment. The bonds were
marketed to investors in Singapore on Monday.
The proceeds of the sale will be used to settle debt owed to
Credit Suisse First Boston and other lenders such as Japan's UFJ
Bank Ltd., Bumi's Finance Director Eddie Soebari said on Feb. 28.
The debt is held by Arutmin and Kaltim Prima Coal.
General Motors in March forecast its largest loss in 13 years.
Within six weeks, Standard & Poor's cut the automaker's credit
rating to BB, two levels lower than investment grade, driving
yields on emerging market debt higher and delaying more than $2
billion of Asian bond sales.
Junk bonds are rated below BBB- by Standard & Poor's or below
Baa3 at Moody's Investors Service.
Arutmin and Kaltim Prima bonds, which are rated a prospective
BBB- by Fitch Ratings, will mature in 2012 and are backed by
current and future receivables generated from their coal mining
production and exports, the rating agency said on June 3.