Investors start to step back due to perceiving ESG or energy dirty business. Indonesian coal, oil, and gas producers face a surge in borrowing cost and reduce access to funding. Bankers argued that the companies suffer from smaller investors, demand to pay a premium, and fewer options for bank funding seeking to raise debt.
Indonesia’s bond and loan volumes have been muted these years, so the high impact occurred. In order to access the market, Indika Energy and Adaro Energy worked hard to pay a great sum of cost. A syndicate head said that the coal sector is surely not a good place. In other words, if the company wants to get deals done they must perform good quality. But although good quality presents, they still have to pay a premium as an additional cost.
Medco Energi Internasional paid a great deal of concession of 75bp. The company paid a smaller valuation of $400m in comparison to $800m for seven-year non-call three bonds. The purchases are for three bonds at 98.376 to yield 7.25%. In March last month, Indika Energy had the yield of 5.875% and 8.25% bonds which are due in November 2024 and October 2025 respectively.
According Refinitiv data, Indika Energy rated Ba3/BB- had eased a bit from all-time high levels of 8.99% and 9.97% on March 9. Before, they had 8% and 9.46%. It is the same with Adaro Energy which eased a bit from it’s all time high of 6.99%. They went 5.92% just recently.
Basically, due to the tough environment most Asian high-yield bonds are generally skyrocketing. But it does not happen to green bonds. They trade in lower yields than in the coal industry. Double B rated Indian renewable companies such as India Clean Energy Holdings and Greenko Energy have U.S. dollar bonds due in 2027 and 2028 respectively, said IFR Asia.