ONGC raises $2.2 bn in India's largest overseas bond sale

Oil and Natural Gas Corporation Ltd, India's largest oil explorer, on Tuesday raised $2.214 billion through dual tranche bond sale, to fund its overseas arm ONGC Videsh Ltd's Mozambique asset purchase.

The issue, the largest overseas bond sale from the country, involved $1.5 billion of dollar bonds and 525 million in euro ($714 million) bonds, merchant bankers said.

This is the largest dual currency RegS issuance from Asia, apart from being the first-ever euro issuance from a quasi-sovereign corporate. It is also the first dual currency RegS issuance from the country.

ONGC Videsh, the wholly-owned subsidiary of ONGC, announced that it has priced $1.5 billion and Euro 525 million unsecured bonds in the international capital markets. These bonds are guaranteed by ONGC.

The RegS bonds were issued in dual currency with two tranches of $750 million each for 5-year and 10-year tenors, respectively, and one tranche of Euro 525 million for 7-year tenor. The bonds are rated Baa2 by Moody's and BBB- by S&P.

The RegS issue (which is not sold to resident American investors) has three tenures - $750 million of 5-year money and the rest is of 10-year tenor, while the euro issue is a 7-year paper, said the merchant bankers, which include RBS, Deutsche Bank, BNP Paribas, Standard Chartered and Citigroup.

The 5-year dollar bonds were priced at T+ 160 bps bearing a fixed coupon of 3.250 per cent per annum, equivalent to a price of 99.598 and a yield of 3.338 per cent and the 10-year bonds were priced at T+207.5 bps bearing a fixed coupon of 4.625 per cent per annum, equivalent to a price of 99.454 and a yield of 4.694 per cent.

The 7-year euro bonds were priced at euro MS+180 bps bearing a fixed coupon of 2.750 per cent per annum, equivalent to a price of 99.623 and a yield of 2.810 per cent.

While the dollar issue hadan over-subscription of over $6 billion, the euro issue received demands worth €1.8 billion over the offer.

The bonds saw a large geographic spread from interested investors from Europe, US and Asia. The investors included fund managers, banks, private banks and insurance/pension funds.

BNP Paribas, Citigroup, DB, RBS and Standard Chartered acted as joint bookrunners and lead managers for the Issue.

ONGC Videsh intends to use the bond proceeds to refinance its bridge loans availed for the recently concluded acquisitions of 16 per cent stake in Rovuma Area 1, Offshore Mozambique.