| The companies are using their 'quasi sovereign status' to get attractive deals in the overseas loan market. |
| Both the oil majors are in the overseas loan syndication market to raise $100 million each for five years. While BPCL is being offered rates around 80 bps over London Interbank Offered Rate (LIBOR), GAIL is being offered a 90 bps spread. |
| Such fine rates for BPCL and GAIL are due to the quasi sovereign status of these PSUs as they are both out of the privatisation list, merchant bankers said. |
| The behaviour of foreign funds in the overseas market is puzzling, sources at a merchant banker said. "On the one hand, they have expressed anxiety over the policies of the new government and are pulling out of India. On the other, these funds, especially Chinese and Taiwanese banks, are offering such fine rates to GAIL and BPCL after their sovereign backing is restored," they added. |
| Spreads over Libor have tightened in the overseas bonds markets by around 10-15 basis points (bps) in the past three months. |
| Towards the end of April, Reliance Energy borrowed $250 million at 125 bps over Libor. ICICI Bank and IDBI Bank raised funds last year at 106 bps and 145 bps over Libor, respectively. |
| GAIL issue is being managed by BNP Paribas, DBS, Standard Chartered Bank and Mizuho, said a banker. The pricing has been almost close to the levels fetched by Indian Oil Corporation which raised funds from overseas market at 75-80 bps over Libor last year when the overseas market was swooning over Indian papers. |
| Their financial standings and the bullish outlook on the oil sector have helped GAIL and BPCL in the fine quotes. |
| This is because National Thermal Power Corporation, which raised funds a few months back, could get it at only 170 bps over Libor. Rural Electrification Corporation is hanging in the market for last four weeks for a good quote to close its issue. |
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