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Millennium Post

India Inc raises $7.5 bn in foreign debt so far in 2013

If the merchant bankers are to be believed, at least $2.5 billion-worth bond deals are in the making in the immediate short-term, with Reliance Industries, ONGC Videsh and Union Bank of India working on international bond sale programmes.

Merchant bankers, who did not want to be named, said that this year corporate India is going to mop up at least $20 billion in foreign debt, mostly through bond sales. So far this year 11 corporates in 13 issuances have sold bonds worth $7.472 billion to foreign investors, while in the entire 2012 corporate India raised just $10 billion in foreign debts.

Reliance, the most cash-rich company in the country sitting over a Rs 84,000-crore cash mount, is planning to raise further $2 billion to fund its capex plan. ONGC arm OVL is planning to raise $1 billion via bond sale to fund its overseas acquisition. The state-run Union Bank is also working on a $500-million issue.

The companies that raised foreign debt this year are Exim Bank (January and March), ICICI Bank, PowerGrid, Tata Communications, Reliance Industries, HDFC Bank, Bharti Airtel (twice in March), Bank of India, IDBI Bank, Suzlon Energy and State Bank of India.

Bharti Airtel led the pack with a $1.5 billion fund-raising in March in two tranches ($1 billion and $500 million) paying a coupon of 5.13 per cent for 10-year. Second biggest fund raiser was State Bank of India, which last Friday mopped up $1 billion through a 5-year US dollar-denominated bond sale that set a new benchmark for itself by pricing it at just 3.25 per cent. Bharti's two issues are interesting as they came in the same month. On 4 March it sold $1 billion worth bonds in a 10-year issue priced at 5.15 per cent. On 25 March, the company again hit the global debt markets with a tap issue or follow-on issue and raised another $500 million in a 10-year issue at a slightly better pricing of 5.13 per cent coupon rate of $ money.

Both the issues were carried out by Bharti's global arm Bharti Airtel International Netherlands. The third biggest amount was raised by RIL, when it sold perpetual bonds worth $ 800 million in the last week of January at a coupon of 5.88 per cent, making history by becoming the first company not only from the country but also from entire Asia, ex-Japan to do so. Exim Bank also hit the market twice in the year. The first was $750 million, 10-year $ bond sale at a coupon of 4 per cent.

Its second issue was a 5-year Australian dollar bond sale worth ASD 200 million priced at 5.76 per cent. Exim is the first domestic issuer to tap the Australian debt market. Early January, ICICI Bank sold bonds worth 225 million Singapore dollars at a coupon 3.65 per cent for a 7-year issue through its Dubai branch. The state-run utility PowerGrid also raised $ 500 million in a 10-year bond issue priced at 3.875 per cent.

The PowerGrid issue marked many firsts: the cheapest ever issue by a domestic state-run company, getting the highest ever over-subscription, and a debut dollar bond sale by the Navratna company. The issue got an oversubscription of over 11 times ($9.5 billion).

Private lender HDFC Bank too hit the bond market in January with 5-year $ money, raising $500 million. The most noteworthy aspect is that this is the cheapest pricing so far by any domestic issue at a coupon of just 3 per cent.

In March, state-run lenders IDBI Bank and Bank of India too raised $500 million each in $ money. While IDBI's was a 5.5-year money priced at 3.63 per cent, BoI's 5-year issue was priced at 3.75 per cent. Tata Communications also mopped up $250 million in a 3-year bond sale denominated in $ in January, priced at 4.25 per cent. The bankrupt Suzlone also hit the bond market in March, and made history as the first company in entire Asia, ex-Japan to raise debt while in a CDR process. The Pune-based wind energy major sold $647 million worth bonds with a 5-year maturity to global investors at 4.97 per cent on the back of guarantees by its lenders.

The money raised went to the consortium of its 19 lenders who would refinance its existing foreign currency loans.
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