JP Morgan, HDFC MF grab IL&FS arm Andhra Pradesh Expressway bond sale
US brokerage JP Morgan picked up bonds worth around Rs 160 crore after fully subscribing to the Rs 530-crore bond issue initially, JP Morgan India debt markets head Madhur Agarwal said.
The issue was fully subscribed by JP Morgan which in turn has sold 70-75 per cent of the issue to two fund houses – HDFC Mututal Fund and Franklin Templeton MF -- IL&FS investor relations head Danny Samuel said.
The MF investors will get 10 per cent coupon, he added.
"Initially, we bought the entire Rs 530-crore non-convertible debenture (NCD) issue from Andhra Pradesh Expressway and later on sold around 70-75 per cent to Mfs," Agarwal said, adding the issue was structured as a takeout financing scheme.
IL&FS' Samuel further said with the bond sales, the company has completely come out of bank loans. The project originally had a debt of a little over Rs 500 crore, including a term loan of Rs 398 crore, from a consortium of 10 banks including ICICI Bank, Canara Bank and bank of India.
Andhra Pradesh Expressway owns a concession for 74.6 km stretch on the NH 7, from the Kotakatta Bypass to Kurnool.
Under the concession agreement, the company is entitled to receive an annuity amount on a semi-annual basis from the National Highway Authority during concession period.
Agarwal said this is an opportunistic investment as this is an already commissioned project. "Accordingly we will be getting annuity from the national highway authority for the 13-year maturity of the issue," Agarwal said, adding for the time being, they have no plan to exit the investment.
Refusing to detail of the return on his investment, he said for the MFs, the coupon is fixed at 10 percent.
The issue is important as this is the first such bond sale in two years and is the first instance of a private capital market investor and mutual funds investing in bonds from an infrastructure company, Agarwal said, adding earlier, all the infra bonds were primarily subscribed to by LIC.
Agarwal also said JP Morgan India was the sole book-runner and structuring adviser to the issue. The NCD sale, which took place on November 8, consisted of listed, rated and secured bonds, according to JP Morgan.
The bonds carry AAA ratings by both Icra and India Ratings and are structured in the form of seven tranche series having staggered maturity with the final tranche maturing at the end of 13 years, Agarwal said.
Be the first to comment.