Power Grid Corp of India (PGCIL) plans to raise up to $500 million through its first ever overseas debt offering next week, a source involved in the deal told FE.
Media reports in November said the state-owned transmission company had planned its maiden overseas issue in the first week of December, but no official announcement was made at the time.
Investors are expected from Asian countries, including Singapore and Hong Kong, the source said, adding that an official announcement on the bond issue is expected on January 9 or 10.
Indian firms are increasingly raising money overseas because of favourable interest rates. In October, BPCL raised $500 million through its maiden overseas bond issue at a coupon of 4.625%. The bond, which was subscribed 15 times, had a spread of 2.90% per annum over the 10-year yield on US Treasury note.
Standard Chartered, Royal Bank of Scotland and Barclays are the underwriters of PGCIL’s offering.
The company is expected to meet fixed income investors in Asia and Europe on January 7-8 to decide on the pricing of the issue.
In November, a media report, citing PGCIL’s finance director RT Agarwal, said the company believes it can price the issue at a spread lower than that of BPCL’s bonds.
The funds are expected to be used to finance PGCIL’s R20,000 crore capital expenditure plan for the year 2012-13. The company is planning to expand its footprint in international markets and is looking to foray into the electricity distribution business. The company in November said it was setting up a new company for its overseas business, following the footsteps of state-owned oil and gas peer ONGC.
Ratings agency Standard & Poor’s Ratings Services on Friday assigned a BBB- long-term corporate credit rating to PGCIL, saying the outlook is negative. It also assigned the same rating to the company’s proposed issue of up to $1 billion unsecured long-dated notes.
?The rating on PowerGrid reflects the company’s near monopoly inter-state transmission business in India and a stable regulatory framework with a cost plus tariff mechanism on most existing projects,? said Standard & Poor’s credit analyst Abhishek Dangra.
?We also believe there is an extremely high likelihood of extraordinary government support to PowerGrid in the event of financial distress. The weak credit quality of the company’s customers and the country and macroeconomic risk associated with India offset these strengths,? he said.