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Banglalink issues first dollar bond in Bangladesh

2010-05-20__cul3Banglalink Digital Communications sold a $300 million five-year note last Friday (25 April 2014) — Bangladesh’s first dollar-denominated bond — as it looks to grow its business domestically and refinance existing debt.

The 144A bond, which started marketing a week before it priced, faced some technical challenges when it came to gauging the fair value of the offering due to the fact that there were limited direct comparables and few high-yield telecom companies in Asia. Despite this, investors say that a yield of around 9 per cent to 10 per cent looks fair when compared with other single-B Asian corporates. Also, a credit analyst said the 250bp yield pickup over the 2019 bonds issued by VimpelCom, its ultimate parent,  looks decent.

“This transaction is a major milestone for Banglalink and further diversifies our sources of funding into international capital markets. We are very pleased with the support of so many high quality global investors for this inaugural offering,??? Ziad Shatara, CEO of Banglalink.

Banglalink’s bond, which is callable in the third year, ended up pricing at a yield of 8.875 per cent, and received an order book of around $900 million from 90 accounts. Asian investors subscribed to a bulk of the notes, accounting for 64 per cent, followed by European and US investors at 29 per cent and 7 per cent, respectively, according to a term sheet.

The bond issuance comes amid Banglalink’s expansionary phase, when Russian parent company VimpelCom plans to invest around $350 million during the next two years to build the 3G network of the local mobile operator, reports FinanceAsia, a news portal.

Banglalink is the second-biggest mobile operator in Bangladesh by subscriber numbers, with 29 million subscribers at December 31, 2013. Moody’s expects the company’s revenues to grow by 10 per cent in 2014 and 5 per cent in 2015, supported by an increase in subscriber numbers and growth in data revenue.

“In many ways Bangladesh is a fundamentally attractive market for a telecom company,??? said Sandra Chow, credit analyst at CreditSights, an independent financial research company. “Mobile penetration is still very low, around 72 per cent based on reported figures, leaving plenty of room for growth. This compares with a penetration rate of over 100 per cent in other developing Asian countries.???

Banglalink’s bond received good quality investor participation. Asset and fund managers subscribed to 72 per cent of the telecom company’s papers, while financial institutions and private banks accounted for 11 per and 17 per cent, respectively, according to the term sheet.

Banglalink is rated B1 by Moody’s Investors Services, Inc. (“Moody’s???) and B+ by Standard & Poor’s (“S&P???), each with a stable outlook. The Notes will be due in May 2019 and are expected to be rated B1 by Moody’s and B+ by S&P. Banglalink intends to use the net proceeds from the offering to repay existing indebtedness and to finance capital expenditures.
The Notes will have a re-offer price of 99.008 per cent with a yield to maturity of 8.875 per cent. The transaction is expected to close on May 6, 2014.  Citigroup is acting as the Sole Bookrunner and Lead Manager on this Rule 144A . Regulation S offering.

Source: Daily Independent

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