Azure Power Solar Energy likely to price its dollar bonds at 5.65 pct

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Published: September 18, 2019 5:09:13 AM

The firm was looking to raise close to $350 million through the issue. Earlier during the day, the initial price target (IPT) on the bonds had come in at 6%, sources indicated.

Azure Power Solar Energy, Solar power, market news, ReNew Power, FPT, Power Finance Corporation, PFC, industry newsAzure Power Solar Energy’s bond issue is “144A/Reg S”, meaning investors from the United States can also participate.

Azure Power Solar Energy is likely to have priced its dollar bonds late on Tuesday evening even as the final price target (FPT) on its 5.25 year notes stood at 5.70% (+/-5 basis points), according to information provided by sources close to the deal.  With this, it becomes the third Indian firm to tap the dollar bond market this month after Power Finance Corporation and ReNew Power.

“Although it is a bit early to say, we believe the issue is likely to get priced on the lower end of the final price target, i.e. at 5.65%. However, it will take some time before we arrive at the final pricing since bids from the US investors are to be taken into account,” a banker close to the deal told FE on Tuesday evening.

The firm was looking to raise close to $350 million through the issue. Earlier during the day, the initial price target (IPT) on the bonds had come in at 6%, sources indicated.

Azure Power Solar Energy’s bond issue is “144A/Reg S”, meaning investors from the United States can also participate. The firm had conducted roadshows since last Tuesday to market its dollar bonds. Moody’s Investors Service has assigned a “Ba2” rating to the proposed notes of Azure Power Solar Energy. The notes are guaranteed by its holding company, Azure Power Global.

“The proceeds of the proposed 5.25-year USD senior notes will be used to refinance the existing project debt of the restricted subsidiaries, refinance the existing debt of Azure Power Solar, incur capital expenditure for repowering, transaction expenses, and advance the balance amount to repay shareholder loans,” Moody’s note said.

Azure Power’s issue comes close on heels of ReNew Power’s dollar bond issuance. Recently, ReNew Power had priced its dollar bonds having a tenor of close to 3 years at 6.45% to raise $300 million from the dollar bond market.  Apart from this, Power Finance Corporation (PFC) also priced its dollar bonds to raise close to $750 million, sources had told FE. PFC listed its global notes on India INX’s Global Securities Market.

Foreign currency bond issuances from India have already crossed the $16-billion mark so far this year and is well on its way to hit a record high with many firms queing up to raise funds, bankers say. “Many well rated non-banking financial institutions are still finding rupee debt cheaper. However, that’s not the case with other firms. There are quite a few sub-investment grade firms which are actively looking at the possibility of tapping the dollar bond market. It is true that a few firms are also looking at raising funds overseas for diversification purpose,” said a banker not willing to be named.

Sources had earlier told FE that firms like Indian Railway Finance Corporation (IRFC) and ONGC are in talks with bankers to explore the possibility of raising a billion dollars each from the dollar bond market.

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