ONGC Videsh Plans to Noost US$ 525 Million to Redeem Bonds Set to Mature Quickly

Videsh is in process to raise US$ 525 million in overseas foreign money loans from a mixture of home and overseas lenders to repay bonds maturing subsequent month.

ONGC is in discussion with a half a dozen international and domestic banks for the loan, and intends to close the deal this month and draw down next month.

The mortgage will include about 1.5% rate of interest and a five-year time period.The corporate is borrowing from banks as an alternative of issuing contemporary bonds as it might assist save about 1 proportion level in curiosity price. ONGC Videsh is planning to use the brand new mortgage of US$ 525 million and inside assets to repay the bonds. In July 2014, it raised € 525 million (US$ 625 million) through a 7-year bond issue to help partially fund the acquisition of a US$ 4.12 billion value of stake in the Mozambique block.

These bonds, which have a fixed annual coupon of 2% and are insured by either mother or father ONGC, are due to be repaid in July 2021. ONGC Videsh raised round US$ 700 million in debt to repay one other mortgage of US$ 775 million final November.It had acquired a 16% stake in Mozambique’s offshore Rovuma Space 1 in two transactions in 2013.

French power large Complete, the operator of the US$ 20 billion liquefied pure gasoline undertaking in Mozambique, declared drive majeure in April following an increase in violence near the undertaking web site. The Mozambique LNG undertaking was initially anticipated to start out manufacturing by 2018 however has been delayed for years on account of a mix of things stretching from an oversupplied LNG market to delayed undertaking financing and native violence.

Meanwhile, ONGC Videsh is waiting for the US to relax its sanctions against Iran, which will allow talks on expanding the Farzad B gas field in the Islamic Republic to resume. ONGC discovered Farzad B more than a decade ago but has been unable to develop it due to years of Iranian restrictions. Iran awarded the license to build Farzad to a local company last month, but this leaves the door open for ONGC Videsh to enter the project with a % share.

Source: IBEF