SINGAPORE – India’s IL&FS Transportation Networks Ltd. has priced a 630 million yuan ($99.9 million) three-year offshore yuan bond to yield 5.75%, marking the first dim sum offering by an Indian non-financial corporate.
The deal by the road builder is the latest illustration of attempts by the country’s firms to raise funding for development while avoiding paying high local interest rates.
Indian banks have frequently tapped the dollar-bond market, and two — the Hong Kong-based unit of India’s ICICI Bank Ltd. IBN -0.56% and IDBI Bank Ltd. — have sold dim sum bonds in recent months. Other companies have sought loans from Chinese banks.
The final yield on the bond — which attracted around 1.2 billion yuan in orders from over 45 accounts — matched early guidance, and was in line with initial price thoughts of “high 5%.”
Analysts noted that the rating on the bond and therefore the yield level reflect an unconditional and irrevocable guarantee from the Export-Import Bank of India.
India’s central bank Tuesday cut its key lending rate for the first time in three years, by a sharper-than-expected half a percentage point to 8%. But it warned that inflation remains a key risk, quashing hopes of sizable rate cuts later in the year.
In another reflection of tight monetary conditions, the chief executive of Lanco Power Ltd. — the power generation unit of Lanco Infratech Ltd. — said Friday that the company is seeking to raise up to $600 million in loans from Export-Import Bank of China.
Anil Ambani group company Reliance Communications Ltd. earlier this year arranged funds from Chinese lenders to refinance $1.18 billion of overseas bonds due on March 1.
And Reliance Power Ltd. in December said it was talking to U.S. and Chinese banks to raise about 440 billion rupees ($8.45 billion) for two power projects in India.
IL&FS’s Reg S bond was issued by ITNL Offshore Pte. Ltd., with IL&FS Transportation Networks as sponsor.
Private banks absorbed 55% of the sale, while funds took 42% and banks’ own accounts 3%. Europe bought 21%, with the remainder going to Asian players.
Deutsche Bank, DBK.XE +2.65% Royal Bank of Scotland and UBS UBS +1.29% were joint bookrunners on the senior unsecured deal, which is rated triple-B minus by Fitch Ratings.