UPL Corp raises $500 million via bond issue, bankers indicate

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Published: June 10, 2020 8:26 AM

Indian firms and banks raised a whopping $7-billion-plus from the foreign currency (FCY) bond market this year, according to market sources.

Moody’s Investors Service had assigned a Baa3 rating to the proposed senior unsecured notes to be issued by the firm.

UPL Corp on Tuesday is believed to have priced its 10-year dollar bonds at 385 basis points over the corresponding US treasury yield, sources aware of the matter said. The firm is believed to have raised $500 million via the issue, bankers indicated.

The initial price target of the issue had stood at 435 bps over the corresponding US treasury yield earlier in the day. “By the time London opened, the books had crossed $2.5 billion. Considering the current times, I think this is a good response to the issue. This shows that despite the sovereign downgrade, there is still demand for the right kind of names out of India,” said a banker close to the deal. FE could not independently verify the details.

Moody’s Investors Service had assigned a Baa3 rating to the proposed senior unsecured notes to be issued by the firm. The rating outlook is stable, Moody’s stated. UPL plans to use part of the bond proceeds towards debt repayment and keep the remainder to shore up its liquidity amid the challenging operating environment. According to Bloomberg, UPL had earlier invited eligible holders of its outstanding $500 million 3.25% notes due in 2021 to tender the notes for purchase by the firm.

Prior to this, REC had raised funds via dollar bonds last month. FE had reported earlier that REC could be the first firm that may hit the overseas bond market post the crisis-led halt. In the first two months of 2020, abundant liquidity available across the globe, fresh allocations at the beginning of the year and a fall in the US treasury yields had helped Indian issuers rush to the overseas bond market where costs were down.

Indian firms and banks raised a whopping $7-billion-plus from the foreign currency (FCY) bond market this year, according to market sources. Exim Bank and Adani Electricity Mumbai raised a billion dollars each this year from the FCY bond market. Other entities that hit the overseas bond market this year include Manappuram Finance, Shriram Transport, Future Retail, Power Finance Corporation, IRFC, among others.

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