BPCL hires four banks for US dollar bond offering

Indian state-owned refiner Bharat Petroleum Corp has mandated four banks for a potential US dollar bond offering.

Deutsche Bank, Citigroup, HSBC and Standard Chartered will lead the offering, the proceeds from which will be used for capital expenditure needs.

The fundraising will be off the refiner's US$2bn MTN programme, which has scored a BBB- rating by Fitch.

BPCL plans to spend Rs 150bn-200bn (US$2.4bn-3.2bn) on its Kochi refinery in the next two years, as reported earlier.

The company is increasing the capacity of the refinery to 15.5 million tonnes per annum from the current 9.5mtpa at a cost of around Rs 165bn.

Meanwhile, the refiner has scrapped its US$500m loan refinancing for which it has received only one bid from a six bank group, according to sources aware of the situation.

Bank of Tokyo-Mitsubishi UFJ, DBS Bank, HSBC, Mizuho Bank, Sumitomo Mitsui Banking Corp and Westpac Banking Corp are the banks forming the sole group that has bid for the BPCL deal.

BPCL scrapped the loan offering as the pricing offered by the bank group did not meet the company's expectations.

In mid-March, the borrower had sent a request for proposals for the loan, which would have an average life of around four years. Banks were asked to respond by April 1.

Sources said BPCL had initially eyed pricing of around 120bp all-in but received offers around 150bp from the bank group.

In January, Bank of Tokyo-Mitsubishi UFJ won the mandate on BPCL's US$100m three-year refinancing at an all-in of 100bp and closed it as a bilateral later.

The Indian Government owns 54.9% of BPCL, the country's third largest refiner.

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