Oil India raises $1 billion in overseas bond sale

PTI Posted online: Tuesday, Apr 08, 2014 at 0000 hrs
Mumbai : State-run oil and gas explorer Oil India (OIL) today became the first Indian company to sell USD 1 billion worth of debt in its debut US dollar bond sale programme.

The issue is in a dual tranche of USD 500 million each.

While USD 500-million, five-year money has been priced at US treasury plus 222.5 bps, the 10-year money of the same size has been priced at treasury plus 272.5 bps, merchant bankers said today.

The PSU raised the money to repay the bridge loan it had taken to buy Videocon's 10 per cent stake in a Mozambique oil block in association with ONGC Videsh late last year.

"Oil India's debut USD 1 billion bond issuance is the largest inaugural RegS transaction from the country and the largest ever issuance by a PSU corporate to date, reflecting investor appreciation of OIL's strong credit quality.

"It reaffirms the international bond investor's strong interest for issuance by high-quality Indian issuers," Standard Chartered India Managing Director (Capital Markets) Jujhar Singh told PTI from Singapore tonight.

He said "Oil India benefited from being the first non-financial corporate issuer in the USD markets for 2014, generating a very large order-book and tightening the final pricing by 27.5 bps for each of the two tranches from its initial guidance, which is a commendable feat."

A Regulation S transaction means that US-based American investors cannot participate in the issue.

Late last year, Oil India had teamed up with ONGC Videsh to buy Videocon's 10 per cent stake in Mozambique's Rovuma Area 1 oil block for USD 2.475 billion. The 10 per cent stake of Videocon is currently split in 40:60 ratio between the two PSUs.