The bonds are to be issued in the ‘Regulation S’ format, implying that it is targeted at Asian and European investors, and US-based investors can’t participate.
UPL Corporation, a Mauritius-based subsidiary of UPL Limited, is believed to have commenced roadshows for its dollar bond issue, which is likely to be priced this week, according to an investment banker aware of the deal. “The notes are proposed to be listed on the Singapore Stock Exchange,” UPL said in an exchange notification. The bonds are to be issued in the ‘Regulation S’ format, implying that it is targeted at Asian and European investors, and US-based investors can’t participate. Six to seven banks are believed to be participating in the issue. “The company will be looking to raise a minimum of $300 million and a maximum of $500 million. The roadshows are being conducted in Singapore, Hong Kong and London. This is an investment grade issuance out of India with a tenor of 10 years. This is one of the better Indian corporates to go out and tap the foreign markets,” said the investment banker. Moody’s Investors Service has changed the outlook on UPL Corporation’s (UPL Corp) Baa3 issuer rating to positive from stable. “At the same time, Moody’s has affirmed the company’s Baa3 issuer rating and the Baa3 rating on the $500 million senior unsecured notes maturing in 2021,” the ratings agency said.
At the same time, Fitch Ratings assigned a ‘BBB-(EXP)’ expected rating to Mauritius-based UPL Corporation’s proposed US dollar senior unsecured notes, whose proceeds will be used mainly to refinance existing loans. “The final rating is subject to the receipt of final documentation conforming to information already received,” it said. Earlier, UPL Corporation had issued five-year dollar bonds in October 2016 to raise $500 million at a coupon rate of 3.25%. According to reports, the issue was priced at 200 basis points over the five year US Treasury yield and was over-subscribed 2.2 times.
Meanwhile, NTPC is likely to hit the dollar bond market soon, according to a banker who also indicated that the company has mandated bankers for the deal. FE had earlier written that NTPC is likely to raise close to $400 million. Despite the rising US Treasury yields, many companies are believed to be queuing up to tap the overseas debt market. The 10-year US Treasury yield was hovering close to 2.85% on Monday evening. Last week, it had touched 2.95%—a level not seen since January 2014. This surge in yield may be a cause of concern for bond issuers as it may push up absolute borrowing costs unless spreads see significant compression.