Indonesia’s telecom tower operator Solusi Tunas Pratama diversified its funding source by tapping the US dollar bond market for the first time, pricing on February 12 a US$300 million offering.

The Reg S five-year non-call three bonds were priced at par with a similar coupon and re-offer yield of 6.25%, which was in line with the final price guidance. The bonds dipped slightly in the secondary market and were quoted at 99.625% in the afternoon of February 13.

This is the second bond transaction from a tower company in Indonesia in two weeks following Tower Bersama Infrastructure, which priced on February 3 a seven-year non-call four US$350 million issue at a yield of 5.25%.

As such, investors used Tower Bersama as a reference for the Solusi Tunas transaction, adding a premium into the latter deal. Solusi Tunas is the third largest tower company in Indonesia – after Tower Bersama and Protelindo – in terms of the number of tower sites and has shorter track operation history. It has expanded its business by making several cquisitions, including tower sites from Ericsson, Bakrie Telecom, XL Axiata as well as other independent tower companies.

The arrangers announced the transaction with an initial price guidance of 6.50% area, representing a concession of 130bp to what is considered the fair value of five-year Tower Bersama bonds. They were able to tighten the guidance by 25bp to 6.25% during the course of the execution and attracted an order book of US$1.1 billion from 125 accounts.

In terms of geographic distribution, 73% of the bonds were sold in Asia and 27% in Europe. By type of investors, fund managers accounted for 71%, private banks 15%, banks 12% and pension funds 2%.

Proceeds from the transaction will be utilized to partially refinance the six-month US$790 million bridge loan facility that Solusi Tunas used to fund the acquisition of 3,500 towers from XL Axiata for 5.6 trillion rupiah (US$467 million). According to Fitch Ratings, the bridge loan was likewise partly refinanced through an equity offering of 2.4 trillion rupiah, a part of which included the conversion of shareholder loans of 462.5 billion rupiah into equity.

BNP Paribas, HSBC, ING, J.P. Morgan and Standard Chartered were the joint bookrunners for the transaction.