20220125-招银国际-TBLAIJ_–_Loan_conclusion_should_lead_to_positive_rating_action_3页_417kb

TBLAIJ Loan Conclusion Summary

Core Content

The document provides an analysis of the loan conclusion for TBLAIJ, a subsidiary of TBLA (Tianjin Bank Limited). It outlines the key details of the USD236 million syndicated loan from 7 banks, including state-owned institutions such as Bank Mandiri, BRI, and Indonesia Eximbank. The conclusion of this loan significantly reduces TBLA's refinancing risk, particularly regarding its outstanding USD168 million issue of TBLAIJ'23, which is due in January 2023.

Main Points

• Loan Conclusion: TBLA has successfully concluded USD236 million in syndicated loans from 7 banks.
• Refinancing Impact: The loan conclusion removes the refinancing risk for TBLAIJ'23, which was the only USD issue outstanding for TBLA.
• Trading Performance: As of the time of the report, TBLAIJ'23 is trading at 98.875 with a yield to maturity (YTM) of 8.2%.
• Risk and Reward: The loan is viewed as offering a favorable risk and reward profile, being a short-dated and lower-beta investment relative to Chinese high yield (HY) debt.
• Debt Maturity Profile: The additional funding allows TBLA to early redeem up to 79% of its outstanding IDR bonds of approximately USD84 million, which are due in March 2023, thereby extending its debt maturity profile.
• Loan Structure: The syndicated loan consists of two tranches:
  • Tranche A: USD170 million for refinancing TBLAIJ'23.
  • Tranche B: IDR900 billion (approximately USD66 million) for refinancing other debts.
• Tenor and Funding Costs: The loan has a 5-year tenor with an option to extend for an additional 2 years.
  • Tranche A has a funding cost of 3M LIBOR + 5.65% per annum.
  • Tranche B has a funding cost of 3M JIBOR + 9% per annum.
• Margin Adjustments: The margin for both tranches will increase by 25 basis points (bps) per annum. Additionally, Tranche B margin will be capped after a 75bps increase.

Key Information

• Expected Rating Action: Based on the loan conclusion, the report anticipates that Moody's will likely remove TBLA from review for downgrade and revise its rating outlook to stable.
• Author Details: The report is authored by Glenn Ko, CFA, Polly Ng, and James Wen from the Fixed Income Department of CMBI Fixed Income.
• Contact Information:
  • Glenn Ko: (852) 3657 6235 | glennko@cmbi.com.hk
  • Polly Ng: (852) 3657 6234 | pollyng@cmbi.com.hk
  • James Wen: (852) 3757 6291 | jameswen@cmbi.com.hk
• CMBIS Background: CMBIS is a wholly owned subsidiary of CMB International Capital Corporation Limited, which is itself a subsidiary of China Merchants Bank.
• Author Certification:
  • The author certifies that all views in the report reflect personal opinions.
  • No compensation was directly or indirectly linked to the report's content.
  • The author has not traded in the stocks covered in the report within 30 days prior to the report's issue and will not do so within 3 business days after the issue.
• Important Disclosures:
  • The report is for informational purposes only and not investment advice.
  • Past performance does not guarantee future results.
  • The report may contain errors and is subject to change without notice.
  • CMBIS may have conflicts of interest and is not liable for any losses incurred by relying on the report.
  • The report is intended for specific recipients and may not be reproduced or distributed without prior consent.

Legal and Distribution Notes

• United Kingdom: The report is provided only to persons falling within Article 19(5) of the Financial Services and Markets Act 2000 or to High Net Worth Companies, Unincorporated Associations, etc., as defined in the Order. It may not be provided to any other person without prior written consent.
• United States: CMBIS is not a registered broker-dealer in the U.S. and the report is intended solely for distribution to "major U.S. institutional investors" as defined in Rule 15a-6. It may not be furnished to any other person in the U.S.
• Singapore: The report is distributed by CMBI (Singapore) Pte. Limited (CMBISG), an Exempt Financial Adviser regulated by the Monetary Authority of Singapore. CMBISG may distribute reports from its foreign entities or affiliates. Legal responsibility for the report's contents is limited to the extent required by law for non-Accredited, non-Expert, and non-Institutional Investors.

Conclusion

The successful conclusion of the USD236 million syndicated loan significantly improves TBLA's refinancing risk profile and is expected to lead to a positive rating action by Moody's. The loan structure and terms are favorable, offering a good risk and reward balance, and the additional funding provides flexibility for TBLA to manage its debt maturity. Investors are encouraged to consult professional financial advisors for independent evaluation.