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IL&FS unit plans investor meet next week for China funds: sources
April 13, 2012 / 3:12 AM / 6 years ago

IL&FS unit plans investor meet next week for China funds: sources

MUMBAI (Reuters) - A unit of India’s IL&FS Transportation Networks Ltd is looking to raise up to $200 million worth of yuan-denominated bonds, two sources close to the deal said on Friday, which would be the second dim sum bond offering by an Indian company.

ITNL Offshore Pte Ltd is set to start road shows for the sale in Singapore on Monday, and in Hong the following day, the sources said.

RBS (RBS.L), Deutsche Bank (DBKGn.DE) and UBS UBSN.VX are the underwriters for the deal, they said.

ITNL Offshore, a Singapore based unit of IL&FS Transportation, is likely to borrow in the three or five years maturity buckets depending on investor response, said the source. It was not immediately clear what the proceeds would be used for.

The bonds are unconditionally and irrevocably guaranteed by the Export-Import Bank of India, a source said.

Bankers for the renminbi-denominated bonds were picked last August but preparing the documents and getting an EXIM guarantee took time, the source said.

The bonds are expected to be rated BBB- from Fitch, the source, and are proposed to be listed on the Hong Kong Stock Exchange.

Steep increases in rupee interest rates, with 13 rate hikes since 2010, have steered Indian companies to raise funds overseas.

IDBI Bank (IDBI.NS) was the first Indian company to tap the dim sum bond last November.

The yuan’s attractiveness has received a boost after New Delhi added the Chinese currency as a external financing vehicle to the U.S. dollar, Japanese yen, euro and the pound sterling in September.

India has set a $1 billion limit for borrowing in yuan within the $30 billion overseas borrowing limit for companies.

Many foreign corporate borrowers, including the World Bank, Volkswagen (VOWG_p.DE), McDonald’s Corp (MCD.N) and Caterpillar (CAT.N), have tapped the CNH market for funds for their Chinese operations, rather than borrowing in the dollar markets and converting into Chinese currency, which can be costlier.

As of this week, 42.49 billion yuan worth of dim sum bonds have been issued in 2012, according to Thomson Reuters data, compared with 17.64 billion yuan worth in the first three months of last year.

Growth in the offshore renminbi, or yuan, bond market has been driven by a near-consensus market view that the yuan will rise, which has enabled top-rated issuers to pay less than 1 percent interest on their offerings.

Writing by Rafael Nam; Editing by Ranjit Gangadharan

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