Comments
Aiming to revive its long-cherished IPO dream in 2013 should the market conditions improve further, the state-promoted Gujarat State Petroleum Corporation Ltd (GSPC) has raised Rs 3,000 crore from the bond market to meet the capital expenditure requirements for its ongoing exploration and production (E&P) activities and for refinancing the existing higher cost short-term loans.
GSPC had entered the bond market for raising Rs 3,000 crore of corporate debt by issuing three different bonds having maturities of 8, 10 and 60 years respectively. “The issue met with an overwhelming response from the financial market and against the total size of Rs 3,000 crore (including green-shoe option of Rs 1,500 crore), bids were received for Rs 10,100 crore,” a company official said here.
The 8-year and 10-year bonds were rated AA by CRISIL and AA+ by CARE. For the 60-year bonds, the ratings assigned by the two agencies were AA- and AA, respectively.
Despite the challenges of the current financial market condition, all these bonds were raised at “very competitive” interest rates of 9.39 per cent for 8-year bonds, 9.45 per cent for 10-year bonds and 10.45 per cent for 60-year bonds.
These are among the lowest rates for this rating category of bonds in the last one year. “In fact, till date, only Tata Power and Tata Steel have been able to raise funds through the perpetual/ 60-year term bonds and the interest payable by GSPC is the lowest-ever in this segment,” the official said.
According to a company statement, this became possible due to a transparent process which involved an “aggressive” bidding response from the top merchant bankers of the debt market in India. The bid evaluation criteria involved a combination of interest rate and arranger's fee and an L1 bidder was selected on the basis of the lowest net cost to the company.
The arrangers to the issue are Trust Capital, ICICI Bank and Axis Bank. The bonds are being listed on the WDM segment of NSE and would be tradable.
The discovery of such low rates for bonds of a Gujarat PSU opens up new areas of fund raising options and is a testimony to the interest of financial market in the State Government’s PSUs, the official said.
GSPC had been trying to raise about Rs 4,000 crore via the IPO route to fund its activities in the Krishna-Godavari Basin but had to postpone its efforts time and again in the last five years. In 2010, it tied up for Rs 3,000-crore term loans through a consortium of 15 banks, led by the Bank of Baroda, to finance its Deen Dayal West (DDW) field in the K-G Basin on the coast of Andhra Pradesh and develop it for commercial production.
The Gujarat Government currently holds a majority equity stake (91.35 per cent) in the integrated energy company, seen as a ‘younger brother’ of ONGC and GAIL in India. Like ONGC, it holds working interests in 15 production fields in the Cambay Basin, in 64 onshore and offshore exploration and production blocks in India and overseas. Similarly, like GAIL, it is a key gas transmission company now expanding beyond Gujarat, up to Jammu and Kashmir in the north and Odisha in the East.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.