Infrastructure finance company IDFC and Mumbai-based SBI Capital Markets have placed an INR30 billion (€354 million; $491 million) listed structured bond for IOT Utkal, an Indian oil and gas infrastructure vehicle.
The issue, one of the largest rupee-denominated energy infrastructure securitisation transactions, has an average tenure of 14.5 years. It ranks among the most sophisticated bond issues ever arranged in India, involving four tranches with different interest rates and maturities to address the needs of various investor classes.
The issue has been assigned an AAA rating by CRISIL and India Ratings, the respective local subsidiaries of rating agencies Standard & Poor’s and Fitch. The proceeds will help IOT Utkal cut funding costs as it builds and operates storage tanks at Indian Oil Corporation’s upcoming refinery in Paradip, on the country’s east coast.
CRISIL, which estimates that India’s infrastructure sector has to raise INR7 trillion through corporate bonds by end of March 2018, described the transaction as a breakthrough for India’s deepening and maturing debt markets.
“Enabling direct access for infrastructure projects to the bond market is crucial if such sizeable funds are to be raised. Future-flow securitisation transactions like the one by IOT Utkal are a step in this direction, showing the way for commissioned infrastructure projects to reduce their cost of borrowings and extend the tenure of their debt profile,” commented Pawan Agrawal, a senior director at CRISIL, in a statement.
IOT Utkal is a special purpose vehicle jointly established by India-based energy specialist IOT Infrastructure, German oil firm Oiltanking and local developer IVRCL Infrastructure and Projects. It will use monthly payments from Indian Oil Corporation to pay investors in the bond.