› HPCL SENDS REFINANCING RFP
HINDUSTAN PETROLEUM CORP has sent out a
request for proposals for a US$300m
refinancing, returning to the market less
than three months after its last visit.
The Indian state-owned oil company is
open to tenors of two to three years. The
deadline for responses is February 2.
In November, HPCL took the bilateral
route for a US$200m one-year financing.
MUFG provided that loan.
› PFC BULLET IN GENERAL SYNDICATION
POWER FINANCE CORPORATION has launched a
US$300m five-year bullet loan into general
syndication with MUFG , Mizuho Bank
and State Bank of India as mandated lead
arrangers and bookrunners.
The loan, prefunded in December, pays
an interest margin of 70bp and has a
remaining life of 4.5 years.
Lenders receive a top-level all-in pricing of
100bp and the lead arranger title for US$20m
or more, via a participation fee of 135bp, or
an all-in of 97.5bp and the arranger title for
US$10m–$19m, via a fee of 123.75bp, or an
all-in of 95bp and the lead manager title for
US$5m–$9m, via a fee of 112.5bp.
The deadline for commitments is
February 28. Bank meetings will be held in
Singapore on January 29, Taipei on January
31 and Tokyo on February 1.
Funds will be used for general corporate
purposes.
State-owned PFC had sent out a request
for proposals in March for a US$100m-
equivalent 10-year financing in euros.
However, it failed to attract any interest for
the facility due to the long tenor.
The borrower last raised foreign-currency
debt in November 2015 when it signed
a US$360m-equivalent yen-denominated
bilateral loan with SBI.
In March 2015, it signed a US$450m 6.5-
year loan with four banks. That facility paid
an all-in pricing in the mid-160s, based on
an interest margin of 128bp over Libor and
a six-year average maturity.EQUITY CAPITAL MARKETS
› JM FINANCIAL READIES SHARE SALEJM FINANCIAL has hired Credit Suisse and IDFC
to work on a Rs6.5bn (US$100m) qualified
institutional placement of shares, according
to a person with knowledge of the plans.
Investor roadshows will start this week
and a launch is expected in the current
quarter.
The Indian investment bank is
conducting a postal shareholder ballot for
the QIP until January 29.
For the six months to September 30, JM
Financial registered a net profit of Rs3.72bn
on revenue of Rs13bn.› HDFC PLANS RS19BN QIPHOUSING DEVELOPMENT FINANCE CORP plans a
qualified institutional placement of shares
to raise up to Rs19bn within the next 12
months, the mortgage lender has said.
The banks on the QIP will be hired later.Tata Steel attracts global attention
Bonds Steelmaker gets strong investor response despite light covenantsTATA STEEL received a resounding response for
India’s first high-yield bond deal of the year,
as investors snapped up a US$1.3bn dual-
tranche offering despite a light covenant
structure and tight pricing.
ABJA Investment, a wholly owned
subsidiary of Tata Steel (Ba3/BB–/BB),
issued a US$1bn 10-year at 5.45%, well
inside initial guidance of 5.875% area, and a
US$300m 5.5-year tranche at 4.45%, from
the initial 4.875% area.
The multinational steelmaker was able
to price inside fair value of 4.6%–4.7% for
the 5.5-year, even though it did not come
with a guarantee unlike its last US dollar
transaction in 2014, when it priced 4.85%
2020s and 5.95% 2024s.
Investors were willing to accept a lighter
covenant structure than in previous issues. A
cross-default provision on the existing 2024s
covers the latest notes, but once the 2024s
are redeemed there will no longer be any
cross-default protection.
Tata Steel does not plan to issue bonds
with cross-default provisions in the future,
giving it more flexibility on its capital
structure.
The company has been issuing loans via
overseas subsidiaries without guarantees and
wants to stick to this process for upcoming
borrowings.
Once the 2024s mature, the investors of thenew 2028 bonds will only have a non-binding
letter of comfort from the parent to fall back on.
“This is a massive plus for the Indian high-
yield sector as as whole,” said a banker on
the deal. “Investors were able to look beyond
the lighter covenant structure.”
The hefty US$4.7bn order book prompted
investors to also buy the steelmaker’s
outstanding 5.95% July 2024s. Those bonds
tightened 10bp during the marketing process,
trading near their tightest level since issue
nearly four years ago.
Orders had peaked at US$7bn before
guidance was tightened. The book included
tickets of over US$150m from global
emerging-market fund managers.
Demand was skewed to the 10-year. More
than half of those notes, or 56%, went to EMEA
investors, a rare feat for Asian Reg S deals,
highlighting the global demand for Tata Steel.
“It was a combination of investors wanting
yield, expectations of better liquidity and
pricing versus the existing curve,” said
another banker on the deal.
The latest offering was wrapped around
par in the aftermarket.DIVERSE ALLOCATIONS
The US$1bn 5.45% January 2028s attracted
orders of US$3.3bn, while the US$300m
4.45% July 2023s gathered US$1.4bn.
The 10-year was 42% allocated to Asia,and 2% went to offshore US accounts. Fund
managers took 58%, banks 26%, corporates
and insurers 6% and others 10%.
For the 5.5-year notes, Asia was allocated
53% and EMEA 43%. Offshore US accounts
took 4%. By investor type, funds and asset
managers were allocated 41%, banks 35%,
corporates and insurers 10%, sovereigns 8%
and the rest went to other investors.
“Based on the buoyant trading performance
of the existing bonds and strong credit appetite
from quality investors, the company launched
an innovative bond structure,” said Koushik
Chatterjee, ED and CFO of Tata Steel in a press
release. “The success of the issue demonstrates
the investor’s confidence in the long term
strategy of the company and we are very happy
with the quality of the investors in the issue.”
The 2023s and 2028s have an initial BB–
rating from S&P.
Tata plans to use proceeds to fund
prepayment, repayment or refinancing of its
offshore debt obligations and for general
corporate purposes outside India.
ANZ , Bank of America Merrill Lynch ,
Barclays , BNP Paribas , Citigroup , Credit
Agricole , DBS Bank , Deutsche Bank , First Abu
Dhabi Bank , HSBC , ING , JP Morgan , Morgan
Stanley , Societe Generale , SMBC Nikko and
Standard Chartered were joint lead managers
and bookrunners.
FRANCES YOON