ONGC Videsh raises $2.2 billion via dollar, euro bonds

MUMBAI: ONGC Videsh Ltd, the overseas investment arm of the country's biggest state-owned energy explorer, has raised over $2.2 billion (about Rs 11,200 crore) through an issue of bonds in two currencies priced competitively to help the company replace debt raised for the financing of acquisition of Mozambique oilfields.

Bankers said long-term institutional investors from overseas lapped up the issue that has been the biggest from India thus far, topping Bharti Airtel's $2 billion-foreign currency bond issue in May this year.

The issue, which closed late Monday, aimed at raising equivalent of $2.2 billion in three equal tranches of 5-year US dollar bond, 10-year US dollar bond and 7-year euro bond. Bankers to the issue said the order book for the issue was over $8 billion due to renewed investors' interest in the India energy story.

"This is a true benchmark deal in terms of size, tenors, currency mix and pricing, evidencing the global investor appetite for quality Indian credits and strength of OVL and ONGC credit," said Manmohan Singh, MD and head of debt capital market for India and South East Asia at The Royal Bank of Scotland (RBS).

RBS along with BNP Paribas, Citigroup, Deutsche Bank, and Standard Chartered Bank was the book runner to the issue. The 5-year US dollar bond was priced at 160 basis points (bps) over benchmark US treasury, while the 10-year US dollar bond was priced at 207.5 bps above the benchmark.

Both were priced closer to the lower end of the guidance. The 7-year euro bond was priced at 180 bps over mid-swaps. As part of ONGC's ambitious plans of global expansion, ONGC Videsh has acquired assets in the energy-rich Mozambique.

OVL along with Oil India bought 10 per cent stake in Mozambique's Rovuma basin from Videocon Industries for $2.48 billion in June last year. In August this year, OVL acquired another 10 per cent stake in the field from Anadarko Petroleum Corp for $2.64 billion.

Bankers said road shows in Hong Kong, Singapore and London last week ahead of the sale indicated that international investors have become optimistic about India and expect the Narendra Modi-led government to push for infrastructure and energy reforms. They expect more Indian companies, especially public sector enterprises, may tap the international market to benefit from the opportunity.

Besides the debt market, PSUs may also look at the equity market for bigticket fund raising. The government is likely to raise Rs 18,000-36,000 crore by divesting 5-10 per cent in ONGC.