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ONGC makes India’s largest ever overseas bond sale, raises $2.2 bn

Nation's largest oil explorer ONGC on Tuesday raised a whopping $2.214 billion — the largest bond sale from the country — through dual tranche money to fund its overseas arm OVL's Mozambique asset purchase. The issue involved $1.5 billion of dollar money and 525 million in euros ($714 million at current exchange rate), merchant bankers said. They 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. 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 money, said the merchant bankers, which include RBS, Deutsche Bank, BNP Paribas, Standard Chartered and Citigroup.

The company could not be immediately reached for comments. The issue is also said to have got one of the tightest spreads for issuance across 5-year dollar and 7-year euro issue.
While the dollar issue got an over-subscription of over $ 6 billion, the euro issue got demands worth 1.8 billion more than the platter.

While the 5-year dollar issue got priced at US treasury plus 160 bps (against a guidance of 180 bps), the 10-year issue is priced at T plus 207 bps. The 7-year euro tranche is priced at MS+180 bps.
The effective coupon for these tenures works out to 3.25 per cent for the 5 year tranche, 4.625 per cent for the 10- year tranche and 2.75 per cent for the euro issue. While 55 per cent of the 5-year dollar issue are Asians, the reset 45 per cent are European investors, for the 10-year money was lapped up by Europeans (45 per cent) and 47 per cent by Asians. As much as 78 per cent of the euro money was lapped by Europeans and 21 per cent by Asians. ONGC Videsh is the overseas arm of the state-owned ONGC and the money raised will be used to fund its acquisition of 10 per cent stake in a giant Mozambique gas field, which it had bought last August for $2.6 billion from the US energy major Anadarko Corp.

India pays second tranche of $550 mn to Iran in oil dues

India on Tuesday paid the second installment of $550 million to Iran to clear over one-fourth of its dues for oil imports from the Persian Gulf nation. Indian refiners had paid the first installment of $550 million on 26 June and second one was paid on Tuesday. A third tranche of an equal amount will be paid by 20 July, government and industry sources said.

Since February 2013, when the US blocked payment channels to Iran for its nuclear programme, India has been paying 45 per cent of its Iran oil bill in rupees through a UCO
Bank branch in Kolkata. For the remainder, it has been waiting for a way to make the payment.
As much as $4 billion has been accumulated in past dues. A payment mechanism is now in place under which $1.65 billion in three equal instalments of $550 million each will be transferred to Iran via the UAE central bank.

Rupee payments equivalent to $550 million were deposited by Indian refiners in the UCO Bank account, which will now be transferred to the Reserve Bank of India for onward credit to the central bank of the United Arab Emirates, which will make payments in dirhams to Iran. Iran is seeking interest on the pending dues. However, the Indian government and the RBI have rejected the request, saying they had always been ready to make timely payments but the problem of mode and channel were due to Iran. Under an interim deal with the US and five other world powers in November, Iran won access to $4.2 billion in past oil revenue from a number of countries, including India.
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