Coal News We love to talk!

APR 30 2014

OVL to raise $2.2 bn via ECBs

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 30th APR 2014

ONGC Videsh plans to raise about $2.2 billion via external commercial borrowings (ECBs) in the current fiscal. Last year, it raised $4.8 billion from overseas through loans as well as issuance of bonds. "It makes sense to raise via ECBs because our spending are in dollars. We would be exploring various options, including bond issues," SP Garg, MD, OVL, told FE.

OVL would borrow these funds to repay bridge (or short-term) loans taken last year by the explorer to pay for its acquisitions, Garg said.

Although the exact price of the ECBs being planned by ONGC Videsh could not be immediately ascertained, sources said that the fixed cost for a five-year bond issue could be around 5%, considerably cheaper than domestic borrowings.

Recently, Oil India raised $1 billion through foreign currency bonds and was the first overseas bond issue in FY15 by an Indian company. Of the total issue, $500 million has tenure of five years, while remaining has 10 years' maturity. The five-year bond has a yield of 222.5 points over US treasury rates, while the 10-year bonds have yields of 272.5 points over prevailing US treasury rates. At present, the US treasury rates for five years is hovering at 1.73%, while it is 2.70% for 10 years.

"The appetite for overseas bonds issued by Indian government-owned energy companies continues to be strong. All these bonds have international rating with strong linkage to sovereign rating. Additionally, these bonds have `Change of Control' clause linked to majority sovereign ownership," said Manmohan Singh, head of debt capital markets, India & Southeast Asia at RBS. According to RBS forecast, yields of 10-year bonds would remain in the grips of a longer-term range 2.5-3%.

OVL funds its capital expenditure programme from internal accruals, while it borrows to fund the acquisitions, Garg said. In FY14, OVL has raised $4.8 billion from the international market via three offshore loan facilities and bond issues.

In FY14, OVL raised $2.5 billion by way of offshore borrowings to finance its acquisition of 10% participating interest in Rovuma Area I Block in Mozambique offshore. In the same year, OVL debut offshore bond market by offering $800 million to finance acquisition of participating interest in ACG field in Azerbaijan.


Oil ONGC Mozambique Asia Azerbaijan ONGC Videsh United States India

Related News

  • PTC bags maximum power supply orders to Uttarakhand and Kerala state utilities in short term power procurement auction  Read more
  • ONGC to begin oil production from Krishna Godavari basin block in 2019  Read more
  • Indian Oil Corp retains top rank in Fortune 500 India list  Read more
  • ONGC Q4 misses, net profit slips 20% to Rs 3,935 cr  Read more
  • Telangana, Andhra fight over water, electricity  Read more
  • Doda villages without power even 68 years after Independence  Read more
  • Coal India arm seeks green nod for Rs 10k crore power plant  Read more
  • First power utility to use QR code for bill payment: Tata Power  Read more
  • Cairn India's Rajasthan oil and gas output surges 3 per cent in Q2  Read more
  • Renewable energy firms explore listing in Singapore  Read more