Russian oil major Rosneft-owned Nayara Energy, formerly known as Essar Oil, has for the first time hit the domestic bond market as it has raised about Rs 2,400 crore to refinance its short-term debt.
ICICI Prudential and Reliance mutual funds are the two large investors in those papers, which offered as much as 9.50% rate with three-year maturity, three people told ET. Other fund houses and insurance companies too are said to have invested.
Axis Bank was the sole arranger for the bond sale.
“This is the maiden domestic bond issuance by the company and one of the largest issuance by amount in "unlisted" bonds category,” said Shashikant Rathi, Axis Bank confirming the matter. It has garnered significant interest from various institutional investors."
Nayara Energy is an integrated oil refining and marketing company, operating Indias second largest single site refinery.
The proceeds of the issue will be utilized to refinance the short-term debt of the company. The “AA” rated papers, two notches lower than the top grade, are known as non-convertible debentures in market parlance.
Over the past one year, the company has refinanced outstanding long term debt at lower costs resulting into annualized interest cost saving of about Rs 400 crore or $ 62 million, said a person with the direct knowledge of the matter.
Majority stake in Essar Oil was acquired by Russias Rosneft and a consortium led by commodity trader Trafigura and UCP Investment Group in August 2017.
Pursuant to this equity transaction, the credit rating of the debt was enhanced by multiple notches reflecting parentage of strong shareholders,
Last year in August, Russian oil company Rosneft acquired 49.13% equity stake and Kesani Enterprises (consortium of Trafigura group and UCP PE Investments) took the same 49.13% equity stake in Nayara Energy, along with captive port and power assets from Essar group.
A few months ago, it went through a name change to emerge as Nayara Energy.
"It will enable positioning the Company to compete and succeed in the new era and meet customer needs in the fastest growing energy market in the world," the company said in a statement.
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