International Financing Review Asia April 4 2020 35COUNTRY REPORT INDIAMLAs joining with US$20m or above
earn a top-level all-in pricing of 285bp via
a 138bp fee, while lead arrangers taking
US$10m–$19m receive an all-in of 280bp
via a 122bp fee.
The borrower’s wholly owned
subsidiaries – EcoGreen Fine Chemicals,
EcoGreen Fine Chemicals Manufacturing,
EcoGreen Fine Chemicals Group, Doingcom
International and Xiamen Doingcom
Chemical – will provide an unconditional
and irrevocable guarantee for the facility.
Proceeds of the loan, to be applied in
accordance with EcoGreen’s green finance
framework, will be used to refinance a
syndicated facility completed in December
2017, and for capital expenditure and
general corporate purposes.INDIA
DEBT CAPITAL MARKETS
› IDBI WITHDRAWS TIER 2 OFFERINGIDBI BANK withdrew a planned onshore
offering of Basel III-compliant Tier 2 bonds
on March 27, after the Reserve Bank of
India announced a slew of easing measures.
The base size was Rs5bn (US$66m) and
there was an option to increase the deal by
a further Rs5bn.The bank said that the decision to
withdraw was made after the central
bank on March 27 cut its policy repo rate
by 75bp and banks’ cash reserve ratio by
100bp, among other measures to support
liquidity, causing a sudden drop in interest
rates. The 10-year government bond yield
decreased 9bp the same day.SYNDICATED LOANS
› NTPC SEEKS DEBUT JBIC GREEN LOANIndia’s largest power producer NTPC is
seeking a maiden ¥40bn (US$370m) 12-year
green financing from Japanese lenders,
even as it is in the market for another
borrowing that is Asia’s largest yen loan.
Export credit agency Japan Bank for
International Cooperation is funding half of the
green loan and providing a partial guarantee
on the remaining commercial portion that
will be funded by domestic lenders in Japan.
Mizuho Bank is the arranger.
The closing of the loan, which was
originally targeted at the end of March, is
delayed due to the coronavirus outbreak.
The deal is in line with JBIC’s Green
(global action for reconciling economic
growth and environmental preservation)
operations established in April 2010
to support projects for environmental
preservation globally.
NTPC is currently in the market with
another yen-denominated loan of upto US$750m-equivalent. Bank of India,
State Bank of India and Sumitomo Mitsui
Banking Corp are the mandated lead
arrangers of the financing, which is split
into seven-year and 10-year portions.› IRFC PICKS TWO FOR US$300M YEN LOANState-owned INDIAN RAILWAY FINANCE CORP
has mandated two banks for a 10-year
yen-denominated loan of up to US$300m-
equivalent.
State Bank of India’s Tokyo branch and
Sumitomo Mitsui Banking Corp Singapore
signed the facility on March 27 and are pre-
funding US$150m apiece.
IRFC had sent a request for proposals in
January for the borrowing, with a base size
of US$100m-equivalent and a greenshoe
option of US$200m.
Proceeds will be used for rolling stock
purchases for Indian Railways.
IRFC’s previous loan was a US$300m-
equivalent seven-year Samurai borrowing
last August. That loan paid a top-level all-in
pricing of 93bp based on an interest margin
of 90bp over yen Libor and remaining life
of 6.75 years.
In September 2018 IRFC wrapped up
a ¥26.231bn 10-year Samurai loan that
offered a top-level all-in pricing of 100bp
based on a margin of 80bp over yen Libor
and a remaining life of 9.5 years.
Mizuho Bank, MUFG and SMBC were
mandated lead arrangers and bookrunners
of both the 2019 and 2018 Samurai loans.Future Retail faces mounting CoC risk
Bonds Fitch follows S&P with rating cut on Indian retailerFitch has followed in S&P’s footsteps by
downgrading India’s FUTURE RETAIL and its
debut US dollar bond on heightened change
of control event risks.
The ratings of both the retailer and the
bonds were cut to B– from BB and placed
on negative watch due to liquidity risks
stemming from loans backed against
pledged shares taken by its controlling
shareholders.
Future Retail’s US$500m 5.6% note due
2025 requires the company’s controlling
shareholders – Future Corporate Resources
and Future Coupons – to maintain a
combined 26% stake. Future Corporate
Resources owns 41.1% of Future Retail
directly and 9.8% via a joint venture with
Amazon, Future Coupons.
The sharp decline in Future Retail’s share
price, however, has prompted lenders to thecontrolling shareholders to demand more
shares as collateral, according to Fitch.
The rating agency said certain lenders are
attempting to invoke pledges equal to 8%
of Future Retail’s total share capital, while
nearly all of Future Corporate Resources’
41.1% stake has been pledged.
A change of control is triggered when
promoter ownership falls below 26% and
there is also a rating downgrade.
S&P downgraded the company and the
bonds to B– from BB– in late March.
Future Retail’s share price has dropped
almost 80% so far this year, with most of the
losses posted in March. As of April 2, Future
Retail’s market capitalisation stood at Rs39bn
(US$513.8m), meaning Future Corporate
Resources’ direct holding is only worth Rs16bn,
lower than the share-pledged loan of Rs27bn,
according to Lucror Analytics.Fitch noted the coronavirus pandemic
will make it more difficult for the controlling
shareholders to reduce share pledges. India
imposed a nationwide lockdown on March 25
for 21 days.
The rating agency will finalise the
ratings once Future Retail’s restructuring
transaction, involving a purchase of in-store
infrastructure assets from Future Enterprises,
is completed.
The company’s 2025s, issued in January,
were bid at a cash price of 48.5 on April 3,
having dropped 50 points since the start of
the month.
Future Retail’s US dollar debut received
decent orders of more than US$3bn at the
time of issuance. US investors took 42% of
the deal as the Indian retailer leveraged its
new partnership with Amazon.
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