Hindustan Petroleum Corp (HPCL) commenced pricing its 10-year dollar bonds on Wednesday with the final price guidance standing close to 167.50 basis points over the benchmark US Treasury yield, according to latest information available with bond market sources. If this pricing holds true, it would be a considerable tightening from the initial price guidance. The initial price guidance stood at 200 basis points over the 10-year US Treasury yield. Market sources pointed at a tentative size of $500 million. The issue is a ‘Regulation S’ issue in which investors from Asia and Europe usually participate. Moody’s Investors Service has assigned a ‘Baa3’ rating to the foreign currency senior unsecured bonds to be issued by HPCL.
“HPCL’s baseline credit assessment (BCA) reflects its position as India’s third largest state owned refiner of crude oil and third-largest distributor of petroleum products in the country. The BCA also reflects the company’s modest financial leverage and its potential cash flow volatility as a result of its exposure to industry cyclicality,” the Moody’s release said.
Fitch Ratings has assigned HPCL’s US-dollar-denominated notes an expected rating of ‘BBB-(EXP)’. Standard Chartered, Citi, DBS, MUFG and SBI Caps are the bankers to the deal, a source pointed out. According to Bloomberg data, HPCL had last issued bonds in 2013 to raise `1,000 crore at a coupon rate of 8.77%.