INDIA
DEBT CAPITAL MARKETS
› PFC HIRES FOUR FOR DOLLAR BONDS
POWER FINANCE CORPORATION has hired Barclays,
MUFG, SBI Capital Markets and Standard
Chartered for a potential benchmark 10-
year US dollar bond offering, according to
sources close to the plans.
Last December, the financing unit for
state and central government-owned
power-generation companies raised
US$400m from a 10-year Green bond at
3.75%, payable semi-annually.
The dollar notes are trading at a yield of
4.833%, according to Thomson Reuters data.
PFC is yet to make an official
announcement on the mandate, size and
tenor.
› RELIANCE JIO RAISES RS10BN AT 7.97%
RELIANCE JIO INFOCOMM has raised Rs10bn
(US$150m) from four-year rupee bonds at
7.97%, according to a filing on National
Depository Limited.
This was the third bond transaction of
the telecom unit of Indian conglomerate
Reliance Industries since the beginning of
April, after it raised Rs50bn at 8% from five-
year notes in two tranches.
Reliance Jio has board approval to raise
up to Rs20bn from debentures.
Crisil, Icra and Care have assigned a AAA
rating to the notes.
Reliance Jio is also planning to raise
Rs50bn from a three-year securitisation
transaction at a yield of 8.25%, according to
market sources.
The final structure is yet to be
announced.
Icra recently assigned a AAA (structured
obligation) rating to pass-through
certificates issued by Rainbow Devices
Trust, under a securitisation transaction
originated by OPC Asset Solutions,
with 4G-enabled mobile-handset lease
rentals due from Reliance Retail as the
underlying.› FUTURE ENTERPRISES RAISES RS5BNFUTURE ENTERPRISES has raised Rs5bn from
six-year rupee bonds at 10%, according to
a filing on National Securities Depository
Limited.
The rupee notes have a put/call option
after three years. SBI Capital Markets is the
lead arranger.On April 21, the Indian retailer raised
Rs3bn from dual-tranche rupee bonds. It
sold a five-year piece for Rs1.2bn at 9.75%
and a six-year portion for Rs1.8bn at the
same yield.
Care has assigned a AA– rating to the
notes.› IDFC INFRA FINANCE RAISES RS5.5BNIDFC INFRASTRUCTURE FINANCE has raised Rs5.5bn
from a dual-tranche rupee bond offering,
according to a filing on National Securities
Depository Limited.
The Indian infrastructure financier raised
Rs2.75bn from a five-year and one-month
tranche at 8.37% and the same amount
from a seven-year and one-month tranche
at 8.415%.
Care and Icra have both assigned a AAA
rating to the rupee notes.› IHC PLANS TWO-YEAR BONDINDIAN HOSPITALS CORPORATION is planning to
raise Rs3.8bn from two-year rupee bonds at
9.5%, according to market sources.
The notes have a call option after one
year.
Brickwork Ratings recently assigned
AA– (structured obligation) to the rupee
notes.Vedanta eyes bonds for acquisition
Bonds Miner looking to raise Rs30bn–Rs40bn after getting nod to buy ElectrosteelVEDANTA is looking to raise Rs30bn–Rs40bn
(US$448m–$597m) from the rupee bond
market at maturities of three to five years to
fund its acquisition of Electrosteel Steels,
according to market sources.
The Indian miner won an auction for the
stressed Electrosteel at the end of March, and
received court approval for the deal on April 17.
The National Company Law Tribunal’s green
light paves the way for the first resolution
among the dozen big defaulters which were
pushed to bankruptcy proceedings last year at
the request of the central bank.
Vedanta will hold about 90% of
Electrosteel and the rest will go to
Electrosteel’s existing shareholders and
financial creditors.
The total purchase price of Rs53.20bn
includes Rs18.05bn towards equity shares
and Rs35.15bn in the form of debt, with the
entire sum going towards settling the debts
owed to Electrosteel’s financial creditors.
“As the payment will be made to the
financial creditors in rupees, Vedanta may
borrow in rupees compared to dollars,” saidKaustubh Chaubal, analyst at Moody’s. “The
exact details of Vedanta’s financing plans in
terms of how much will be funded through
loans or bonds in INR are not yet known.”
Vedanta did not reply to a request for
comment on its fundraising plans. It is yet to
make an official announcement on the size
and tenor.
Earlier in April, Vedanta raised Rs40bn
from a private placement of three-year bonds
at 8.5%, split across two tranches.CREDIT POSITIVE
Moody’s in a recent note described the
acquisition of Electrosteel as credit positive
for the Vedanta Resources group because it
will enhance the company’s business profile
and revenue generation, while having a
marginal effect on credit quality.
The rating agency expects the mining
group’s adjusted pro forma net debt/Ebitda
for FY18 to increase to 3.7x from around 3.5x if
Vedanta funds the acquisition fully with debt.
Nomura analysts warned of a slight
deterioration in leverage with a 5%increase in debt.
Vedanta Resources, the London-listed
parent, raised nearly US$2bn from US dollar
bonds last year, and signed a term loan for
US$840m.
As of September 2017, Vedanta had
US$6.1bn of cash, of which US$1.89bn
was held at Vedanta Limited, US$3.1bn
and US$934m respectively at subsidiaries
Hindustan Zinc and Cairn India Holdings, and
the balance across various other subsidiaries,
according to Moody’s.
Electrosteel, which received claims
totalling Rs133bn from its creditors, is one of
several steel companies facing bankruptcy
proceedings. Essar Steel, Bhushan Steel,
Bhushan Power and Steel and Monnet Ispat
and Energy also featured on the RBI’s list of 12
major defaulters, and are also being auctioned
off to repay creditors. Tata Steel won the
bidding for Bhushan Steel last month.
“The bidders are likely to raise debt to
finance the acquisition of stressed assets,”
said Chaubal at Moody’s.
KRISHNA MERCHANT