OVL, wholly-owned subsidiary of ONGC, today announced that it has priced an inaugural US$800 million dual-tranche USD senior unsecured bond offering (the “ Issue”). The Reg S Notes priced US$300 million in 5-year tenor and US$500 million in 10-year tenor and were rated Baa2/BBB-(Moody's/S&P). The Notes are unconditionally and irrevocably guaranteed by ONGC.
The Notes were over-subscribed with an order book aggregating close to US$3billion from high quality investor accounts. The transaction is significant on various accounts:
- Inaugural USD bond issuance for OVL
- Lowest ever coupon achieved by an Indian issuer in the 5-year & 10-year tenor in the USD bond market
- Largest Reg S only transaction by an Indian issuer in the USD bond market
After successfully completing investor roadshows across Singapore, Hong Kong and London, OVL decided to announce a dual-tranche Reg S transaction on Monday, April 29, 2013. Initial guidance of T+200bps area for a 5-year tranche and T+230bps area for a 10-year tranche with both tranches expected to be US$ benchmark in size was released to the market at Asia open on April 29, 2013.
The order book which grew on the back of demand from high quality investors allowed OVL to tighten guidance.
The 10-year tranche priced at the tight end of guidance at 210bps over the 10-year Treasury, equivalent to a price of 99.950 and a yield of 3.756%. The 10-year tranche bears a fixed coupon of 3.750% per annum, with interest payable semi-annually in arrears. The 5-year tranche finally priced at a spread of 190bps over the 5-year Treasury, equivalent to a price of 99.655 and yield of 2.574% per annum. The 5-year tranche bears a fixed coupon of 2.500% per annum, with interest payable semi-annually in arrears.
OVL will apply the net proceeds to replace bridge financing availed for acquisition of participating interests in upstream and midstream oil and gas assets in Azerbaijan which was completed in March 2013.
For the 10-year tranche, in terms of geographic distribution, Asian investors were allocated 69% of the deal, European investors 27% and US offshore investors 4%. The 5-year tranche saw 72% being allocated to Asia based investors, 18% to Europe and 10% to US offshore investors.
The 10-year tranche saw 54% of the allocations going to Asset Managers, 25% to Banks, 17% to Insurance and 4% to Private Banks. The 5-year tranche saw 60% allocated to Asset Managers, 23% to Banks, 9% Insurance, 5% Private Banks and 3% to Sovereign Wealth Funds.
Mr. D K Sarraf, Managing Director of OVL, said, “We are delighted with the strong interest shown by top global investors in OVL's inaugural bond issue. While this was the largest RegS issuance from India, the transaction was well executed to achieve the lowest pricing in the 5-year and 10 year tenor in the USD bond market by an Indian issuer. High participation by real money investor demonstrates the superior quality of the order book and the confidence of global investors in the fundamentals of the Company”.
Citigroup, DB, RBS acted as joint book runners and lead managers.
These materials are not for distribution (directly or indirectly) in or to the United States, Australia, Canada, or Japan. The Notes have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”), or any state or other securities laws, and are being offered to investors outside the United States in reliance on Regulation S under the Securities Act. OVL does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States. These materials do not constitute an offer of securities in India (whether to the public or by way of private placement) within the meaning of the Indian Companies Act, 1956 or any other applicable statutes, rules and regulations of India for the time being in force.
Oil and Natural Gas Corporation Ltd.
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