Fundraising: IRFC, ONGC explore dollar bond market to raise $1 billion

By: |
Published: August 29, 2019 5:48:35 AM

The IRFC issue is likely to be a “144A/Reg S” one so that US investors can participate along with investors from other regions, the persons said.

IRFC, ONGC, dollar bond market, US Treasury yield, Bond investors, dollar bondThe ten-year US Treasury yield has fallen significantly since the end of November 2018, plunging by 178 bps to 1.45%. This is good news for the high rated bond issuers out of India. (Reuters photo)

Indian Railway Finance Corporation— the finance arm of Indian Railways — and ONGC are understood to be exploring the dollar bond market to raise $1 billion each, persons familiar with the matter told FE. “IRFC is looking to issue a 10-year paper to pick up close to a billion dollars. It is too early to say but we believe that a pricing of 160-165 basis points over the 10-year US Treasury yield may be possible in the current environment,” the persons said.
The ten-year US Treasury yield has fallen significantly since the end of November 2018, plunging by 178 bps to 1.45%. This is good news for the high rated bond issuers out of India.

The IRFC issue is likely to be a “144A/Reg S” one so that US investors can participate along with investors from other regions, the persons said. In March, IRFC raised $500 million and the 5-year paper was priced at 150 bps over the corresponding US treasury yield. The issuance received over $1.2 billion worth of bids, according to Bloomberg.

Also read: ICICI Prudential Life Insurance shares jump to 52-week high; should you buy or sell stock?

Oil explorer ONGC is also believed to have held talks with bankers to explore the possibility of a dollar bond issue, bankers said. The firm is also looking to raise $1 billion through a 5-year paper. Bond investors evaluate a firm’s secondary market spread before investing in a fresh bond issued by them. It may be good news for IRFC that spreads on its 5-year dollar paper issued in March have come down to 137 bps. The firm is also set to sign a 7-year Yen Samurai loan of Rs 3,285 crore this week, according to Bloomberg. Emails sent to IRFC and ONGC remained unanswered till the time of going to press.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Vodafone Idea gets shareholders nod to raise share capital to Rs 50,000 crore
2Cabinet clears Rs 6,268-crore sugar export subsidy
3Nestle to replace Indiabulls Housing Finance in Nifty 50; investors’ wealth shot up 23-fold in a decade