Oil India raises US$1 billion through overseas bond sale

Oil India raises US$1 billion through overseas bond saleMaking debut of its U. S. dollar bond sale programme, state-run oil & gas explorer Oil India Ltd (OIL) on Tuesday raised US$1 billion.

The state-run energy giant's bond issue is in a dual tranche of US$500 million each. The first tranche of US$500-million, 5-year money has been priced at U. S. treasury plus 222.5 basis points (bps), while the ten-year money of another tranche of US$500-million has been priced at treasury plus 272.5 bps.

The bond issuance by OIL is the largest inaugural Regulation S (RegS) transaction from India and the largest ever issuance by a public sector corporate thus far, which reaffirmed global investors' strong interest in bonds issued by high-quality Indian companies.

It may be noted here that a Regulation S transaction means that U. S.-based American investors can not participate in the issue.

Jujhar Singh, Managing Director (Capital Markets) at Standard Chartered India, said, "Oil India's debut USD 1 billion bond issuance is the largest inaugural RegS transaction from the country and the largest ever issuance by a PSU corporate to date, reflecting investor appreciation of OIL's strong credit quality."

He added that OIL benefited from being the very first non-financial corporate in 2014 to launch the bond issue in the USD markets.

During 2013, Indian companies raised US$16billion through bond sales, up 60 per cent over the previous year. However, the domestic companies are avoiding aggressive bond issues this year to tap international market, mainly due to soaring interest rates in the U. S. and other foreign markets.

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