Telkomsel hits the road this week to market US$100m bonds
Telkomsel hits the road this week to market US$100m bonds
Agencies, Hong Kong/Jakarta
Indonesia's largest mobile phone operator PT Telekomunikasi Selular, or Telkomsel, is hitting the road this week to market US$100 million of five-year bonds via UBS Warburg.
Telkomsel is the mobile phone unit of state-owned local call operator PT Telekomunikasi Indonesia, which is also preparing to offer between $100 million and $150 million of bonds via J.P. Morgan in June.
Telkomsel will start presentations in Singapore on Thursday, then will move on to Hong Kong Friday and finish in London next Monday, with pricing expected thereafter.
Indicative pricing won't likely be set until the company meets with investors later this week, but one investor noted that the coupon "should be over 10 percent" in order to attract demand and to reflect the country's risk.
Earlier Monday Telkomsel received a B+ corporate credit rating by Standard & Poor's. The company's proposed bond was also rated B+. Telkomsel's ratings are above Indonesia's CCC sovereign ceiling.
In its rating report, S&P said that Telkomsel ratings "reflect the volatile climate in (Indonesia), the weakness of the local currency, increasing industry competition and regulatory uncertainty."
However, S&P noted that the company's rating is supported by its "lead position in Indonesia's low-penetration cellular market, its low debt leverage, strong earnings, and supportive shareholders."
Singapore Telecom's 35 percent stake in Telkomsel also supports the Indonesia company's credit strength.
Meanwhile, Fitch Ratings has assigned a foreign currency rating of B- and a local currency rating of BB- to Telkomsel. The outlook for both ratings is stable.
At the same time, Fitch assigned a rating of B- to Telkomsel's wholly-owned subsidiary Telekomunikasi Selular Finance Limiteds (TSFL) proposed US$100 million issue of notes due 2007.
"The ratings reflect Telkomsels leading market position in the rapidly expanding Indonesian cellular market. Telkomsel has the largest mobile network; market share exceeding 50%; the highest levels of profitability; and a very sound financial profile," Fitch said in a statement.
Separately, Moody's Investors Service said it has assigned a 'B3' rating to Telkomsel's proposed $100m bonds due to mature in 2007.
At the same time Moody's also assigned Telkomsel a local currency issuer rating of 'B1'. The ratings outlook is stable.
"This is the first time that Moody's has rated debt of Telkomsel, the largest cellular telecommunications operator in Indonesia," Moody's said.
Still in Indonesia, PT Indofood Sukses Makmur, the world's largest instant noodle maker, is still looking at alternatives to help refinance part of its US$250 million debt which matures in June.
The company is in talks with Credit Suisse First Boston to arrange a potential international bond issue. According to market talk, the issue will likely be a Eurobond.
Investors will likely keep an eye on Indonesia's negotiations with the Paris Club of sovereign creditors this week.
The Paris Club is widely expected to give Indonesia more time to repay $5.5 billion of official debt, but there had been some concern that Indonesia would also ask private creditors to reschedule other debt, such as the country's $400 million of sovereign bonds due in 2006.
If that's the case, it will likely shatter the recent renewal of confidence from international investors on Indonesian assets, and make the sale of the bonds currently in the pipeline very difficult.
Nevertheless, bankers don't seem too worried that private creditors will be dragged into the Paris Club negotiations, and continue to pitch deals with potential Indonesian issuers.