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OIL raises $1 bn through foreign currency bonds

Public sector explorer Oil India (OIL) on Tuesday raised $1 billion through foreign currency bonds.

Public sector explorer Oil India (OIL) on Tuesday raised $1 billion through foreign currency bonds.

Of the total issue, $500 million has tenure of five years, while remaining has 10 years maturity, banking sources based in Singapore told FE.

?The books were covered almost 8.5 times. The 5-year bond has a yield of 222.5 points over treasury rates, while the 10-year bonds have yields of 272.5 points over prevailing treasury rates,? the source added.

The government-owned company will use the proceeds to pay for the recent stake it has bought in Mozambique gas fields. In January, OIL along with ONGC bought Videocon Industries’ 10% stake in Rovuma-1 project in Mozambique. Oil India has 40% share in the acquisition.

?The deal by Oil India set a benchmark in terms of pricing and investor demand,? said Manmohan Singh, head of Debt Capital Markets, India & South East Asia, RBS.

RBS is one of the bankers appointed by Oil India for the bond issue. Other managers include Citi, Deutsche Bank, HSBC, and Standard Chartered.

?The company has to pay for its stake in dollars and that is the reason for Oil India raising money through foreign currency bonds,? the source explained.

In December 2013, OIL raised $1 billion and $300 million for overseas acquisition in two separate deals.

The Rovuma-1 field holds 45 to 75 trillion cubic feet of gas reserves, which are proposed to be converted into liquid form (LNG) for export to nations including India. First gas production is expected by end of 2018.

In the 12th five year plan, OIL targets to spend R19,003 crore. Of this 32% would be spend for exploration, 21% for development, 17% each for capital requirement and overseas projects and remaining to carry out surveys and investments.

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First published on: 09-04-2014 at 05:32 IST
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