Bankers in the know said the issue size is yet to be decided, but will be around the benchmark size for offshore bonds. In May last year, ONGC had raised $300 million through five-year bonds and $500 million through 10-year bonds.
On Monday, Bloomberg had reported an initial pricing guidance of 180 bps over the current US treasury note yield for the five-year bonds, 225 bps over the US treasury note for the 10-year bonds and 190 bps over the mid-swap rate for the euro-denominated bonds. However, sources added that spreads for the bonds might be priced about 15 bps lower.
The proposed bond issue was rated BBB- by Standard and Poors. ONGC expects to primarily use the proceeds of the proposed notes to refinance existing bridge loans incurred to acquire a participating interest in a Mozambique entity, the agency said in a note.
Spreads on bond yields offshore have contracted to their lowest levels since 2007 as shown by ICICI Banks issue, which raised $250 million at 185 basis points over five-year US treasury. Market players also said that appetite for Indian paper abroad is high and expect issuances worth $15 billion.
So far in 2014, Bharti Airtel, through its Netherlands subsidiary, has had the biggest issuances till date. Bharti raised $1 billion in dollar-denominated bonds and 750 million euros in euro denominated bonds.