November 3, 2022 (MLN): Asian Pacific (APAC) corporates have seen a significant increase in bond buybacks since July’22, demonstrating a rising trend of opportunistic tender offers to reduce interest expenses and improve balance sheets.

Around 18 APAC corporates decided to buy back 46 outstanding bonds during July’22, whereas 17 corporates completed tender offers and repurchased their 20 outstanding bonds from Jan’22 to Jun’22.

Notably, the 31 bonds tendered so far during 4Q22 are already a quarterly record.

Furthermore, corporations are taking advantage of the 5%-25% price discount on their bonds to reduce expenses and by reducing outstanding bonds maturing over the next two to three years.

The Softbank Group dominates the tender offers during 2H22 after the buyback of $2.3 billion worth of its outstanding bonds in Oct’22, equivalent to 15% of its outstanding US dollar- and euro-denominated bonds and subordinated bonds.

The energy and utilities sector issuers accounted for five of the 18 making tender offers, followed by the metals & mining and the telecom sectors, each with three corporates.

In past year the cash flows of E&U and metals & mining sectors  increased amid to higher commodity prices.

An Indonesian company upstream oil and gas producer PT Medco Energi Internasional Tbk (B+/Positive) cash flows increased due to higher oil and gas prices and announced tender offers to repurchase 50% of the earlier maturing 2025 bond.

In the Indonesian coal mining sector, both PT Indika Energy Tbk and PT ABM Investama used their cash flows to repurchase their bonds.

PT ABM Investama’s offer price of $100 which is higher than the current market price of $87, underlining the focus on using high coal prices to reduce debt.

Similarly, Indonesian property developer PT Alam Sutera Realty Tbk buyback 81% of its secured dollar notes due 2024 to reduce its foreign-currency exposure and reduce balance sheet risk.

Moreover, Chinese hotpot restaurant chain Haidilao International Holding Limited decided to buyback their 45% of its dollar bonds due 2026 in October at a purchase price of $84.

Copyright Mettis Link News

Posted on: 2022-11-03T12:06:13+05:00