News Oil & Gas

ONGC Videsh raises $420 million from DBS and BoB banks


Mumbai: ONGC Videsh, the overseas exploration arm of Oil and Natural Gas Corporation (ONGC), has raised $420 million from Singapore’s DBS Bank and state-owned Bank of Baroda (BoB) in a deal closed earlier this month, taking advantage of the recent drop in global interest rates.

Both the banks are meeting prospective lenders in a bid to distribute the loan to a wider network of banks across Asia, people familiar with the transaction said.

“This is a five-year loan raised at about 125 basis points above the corresponding benchmark secured overnight financing rate (SOFR) and is likely to be syndicated to other lenders in the region by next month,” one of them said.

The five-year SOFR is currently at 3.66%, which means ONGC Videsh is paying around 4.91% interest for the loan. One basis point is 0.01 percentage point.

A spokesperson for DBS, the lead arranger, confirmed that the bankers are scouting for syndication opportunities across Asia.

BoB did not reply to an email seeking comment. An ONGC Videsh spokesperson said the loan is a refinance for a previously taken loan.”DBS is the lead arranger with $300 million and BoB has $120 million,” the spokesperson said. “Bankers have already had roadshows in Taiwan (and) Singapore and are also meeting lenders in Dubai in the process of syndication. This loan is guaranteed by the parent ONGC.” Bankers are hoping that ONGC Videsh’s sovereign backing and India’s emergence as the fastest-growing large economy in the world will lead to strong demand for the loan, people cited above said.Last August, the government gave ONGC Videsh the ‘navratna’ status, which allows it to undertake capital expenditure without any ceiling and raise debt from domestic and international markets with approval from the government and Reserve Bank of India (RBI).

Later that month, Fitch affirmed ONGC Videsh’s credit rating at ‘BBB-‘, in line with its parent and the sovereign.


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