INDIA
DEBT CAPITAL MARKETS
› GREENKO ISSUES FROM HOLDCO
Indian renewable energy company GREENKO
ENERGY HOLDINGS on August 14 priced
US$350m 3.5-year non-call 1.5 senior
unsecured bonds at par to yield 6.25%,
inside initial guidance of 6.5% area.
Greenko Mauritius will issue the 144A/
Reg S bonds and Greenko Energy Holdings
is the parent guarantor. The bonds are
expected to be rated Ba1 by Moody’s, in line
with the parent guarantor.
Greenko also had 4.875% bonds due
2023 quoted at a yield of 5.5%. However,
those were issued through Greenko
Investment with a guarantee from the
parent and used to subscribe to rupee debt
from Indian subsidiaries, giving Greenko
Investment security over the assets of those
subsidiaries.
As a result, bonds issued through
Greenko Mauritius, an intermediate
holding company for subsidiaries that
account for practically all of Greenko’s
business, were expected to pay a higher
yield.
No final order book size was disclosed.
By region, 41% of the bonds were allocated
to Asia, 41% to the US, and 18% to Europe.
By investor type, 94% went to funds, 5% to
banks and private banks, and 1% to others.
The bonds are expected to be rated
Ba1 by Moody’s, in line with the parent
guarantor. Singapore sovereign wealth
fund GIC owns a 64.9% stake in Greenko,
and other shareholders include Abu Dhabi
Investment Authority.
Proceeds will be used to repay a
US$125m EIG note, and certain other
debt, as well as to fund an interest reserve
account and other expenses. The EIG note
pays a 5% cash coupon plus 8% in kind and
is due in 2020.
Barclays, Deutsche Bank and JP Morgan were
joint bookrunners.
The bonds were quoted at a cash price of
100.0/100.2 around midday the following
day.
› MOODY'S DOWNGRADES INDIABULLS
Moody’s has downgraded INDIABULLS
HOUSING FINANCE’s ratings by one notch
due to renewed pressure on the cost and
availability of funds.
The rating agency cut the corporate
family ratings, foreign and local currency
senior secured ratings of the housing
finance company to Ba2 from Ba1. It
changed the outlook to negative as tight
funding conditions may persist for some
time, putting pressure on the company’s
profitability and asset quality.
Indiabulls Housing Finance’s US$350m
6.375% bonds due May 2022 were trading
at an unchanged cash price of 92.40 on
August 15, with the yield close to an all-
time high of 9.55%.
The incremental cost of funds for the
lender increased by 45bp in the quarter
ending June compared to the previous
quarter and the balance sheet declined by
7% over the same period.
As interest rates on high-quality liquid
assets have declined, the company’s
strategy of holding a relatively high pool
of liquid assets which was a positive rating
factor has become costlier, causing a drag
on earnings due to negative carry, Moody’s
said. At the same time, the company’s
progress in improving the quality of
its liquid assets has been slower than
anticipated.
While capital levels have been
strengthening, Indiabulls Housing Finance
faces asset quality risk from exposure to
corporate loans. Loans with weak borrower
profiles, mainly from corporates, surged
57% quarter on quarter.
The non-banking financial company
announced in April that it will merge with
Lakshmi Vilas Bank and get converted
into a bank. While the merger proposal is
awaiting approval from the Reserve Bank of
India, if it is approved and implemented, it
will be a significant credit positive for the
company, Moody’s said.› RELIANCE WINS CONSENTIndian conglomerate RELIANCE INDUSTRIES has
won consent from holders of its US dollar
bonds issued through Reliance Holding USA
to amend certain terms to allow an intra-
group reorganisation.
It will roll Reliance Holding USA
into Reliance Energy Generation and
Distribution, which will then be merged
with Reliance Industries. Following the
reorganisation, Reliance Industries will be
the issuer of the dollar bonds.
Reliance Industries will pay US$1 per
US$1,000 of principal to bondholders who
gave their consent to the changes. The
offer applied to its US$1bn 4.5% bonds due
2020, US$500m 6.25% bonds due 2040, and
US$1.5bn 5.4% bonds due 2022.
Bank of America Merrill Lynch, Citigroup,
HSBC and JP Morgan were lead solicitation
agents for the offer. ANZ, Barclays, Credit
Agricole, MUFG, Societe Generale and
Standard Chartered were co-solicitation
agents.› RIL’S DOLLAR BONDS SURGEThe cash price of RELIANCE INDUSTRIES’ 6.25%
US$500m bonds due October 2040 touched
an all-time high of 137.45 to yield 3.69% on
August 12 after the Indian conglomerate
said it would sell a 20% stake in its oil-to-
chemicals business to Saudi Aramco.
The dollar notes were hovering at a cash
price of 137.13/138 on August 13.
Saudi Aramco and RIL have signed a non-
binding letter of intent on the sale of the
stake, valued at US$75bn.
Moody’s Investor Service said in a note
that the sale is credit positive as it will
reduce debt.
The move comes after RIL announced
recently that it would sell a 49% stake in its
fuel marketing business in India to global
oil major BP PLC for US$1bn.
Moody’s estimates that the two
transactions will reduce RIL’s net debt by
US$16 billion, and lower its net debt/Ebitda
by 1.2 times from 3.2 times for fiscal year
2019.
“The stake sales are in line with RIL’s
commitment to reduce its net debt
to zero by March 2021, and reflect its
commitment to maintaining a strong
financial profile despite significant capital
spending over the last five years,” Vikas
Halan, senior vice president at Moody’s,
said in a note.
In July, RIL sold its telecom tower
business to Brookfield Asset Management
for Rs252bn (US$3.5bn) and also transferred
its optical fibre assets to two separate
infrastructure trusts in order to raise
money from large global institutional
investors by March 2020.
It has also announced its intention
to sell stakes in its digital services and
retail businesses to strategic investors
and monetize some of its real estate and
financial assets, Moody’s said.› BAJAJ FINANCE ISSUES SEPT 2022 BONDSBAJAJ HOUSING FINANCE has raised Rs23bn from
bonds maturing on September 7 2022 at
7.946%, according to a filing on National
Securities Depository Limited.
The non-banking financial company was
eyeing Rs100m, plus a greenshoe option of
Rs23bn from secured bonds.
Crisil has assigned a AAA rating to the
notes.› EPFO HALTS PRIVATE BOND INVESTMENTSThe board of trustees of India’s pension
fund has halted further investments in
bonds of private companies and tightened
its rules for investments in bonds issued by
state-owned companies.