Times of India: July 22, 2016
New Delhi: ONGC Videsh Ltd, the overseas acquisition arm of state-run explorer ONGC, has raised $1 billion through a dollar-denominated bond issue, the largest float size achieved by an Indian corporate this year.
The money has been raised in two packs of $600 million and $400 million with 10 year and 5.5 year maturity, respectively, and will be used to fund acquisition of a 15% stake in Russia's second biggest oil field Vankor.
The 10-year papers have been issued at a coupon rate of 3.75% and those with 5.5-year maturity carry an interest rate of 2.875%. ONGC Videsh would use the proceeds to refinance a $1.2 billion bridge loan taken in May at 1.3% interest from a group of foreign banks to pay for the Vankor deal.
The rate of interest on the latest bond float by ONGC Videsh nearly reflects levels seen in 2013 and lower than 4.6% the company paid on a $2.2 billion 10-year bond issue in July 2014 to finance its acquisition of a stake in Mozambique's Rovuma-I field.
The bonds were oversubscribed by more than two times across 185 participating investor accounts, indicating the robustness of the company's balance sheet. The issue saw a large geographic spread, drawing interest of fund managers, banks, private banks and sovereign wealth funds from Asia, Europe and offshore US accounts.
OVL had sealed the Vankor stake deal with Kremlin-backed Rosneft, the world's largest publicly-traded oil producer, in September last year for nearly $1.3 billion. It inked another preliminary deal to acquire an additional 11% in the field and is working on closing it.
Vankor is the largest field to have been discovered and brought into production in Russia in the last quarter of a century and is located in Krasnoyarsk region of Eastern Siberia. As of January 1, 2015, the initial recoverable reserves in the field are estimated at 476 million tonnes of oil and condensate as well as 173 billion cubic metres of gas. Total production in 2015 stood at 22 million tonnes of oil, condensate and gas. The 15 per cent stake will give OVL 3.3 million tonnes per annum of oil production.
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