ONGC Videsh Secures $420 Million Fuel Injection from DBS Bank and Bank of Baroda

18 Jan 2024 , 10:55 AM

Taking advantage of the recent decline in interest rates worldwide, ONGC Videsh, the exploration branch of Oil and Natural Gas Corporation (ONGC) for overseas markets, has raised $420 million from DBS Bank in Singapore and the state-owned Bank of Baroda (BoB) in a deal that was finalised earlier this month.

According to news reports, both banks are engaging with potential lenders in an effort to disburse the loan to a larger network of banks around Asia.

‘This is a five-year loan raised at about 125 basis points above the corresponding benchmark secured overnight financing rate (SOFR) and is likely to be syndicated to other lenders in the region by next month,’ one of them stated.

With the current five-year SOFR of 3.66%, ONGC Videsh is paying approximately 4.91% in interest on the loan. 0.01 percentage points make up one basis point.

The representative of DBS Bank who talked to ET stated, ‘DBS is the lead arranger with $300 million, and BoB has $120 million.’ ‘In the course of the syndication process, bankers are meeting lenders in Dubai in addition to holding roadshows in Taiwan and Singapore. The parent company of ONGC is guaranteeing this debt.’ According to the sources mentioned above, bankers are expecting that the sovereign backing of ONGC Videsh and India’s development as the world’s fastest-growing big economy will result in substantial demand for the loan.

After bestowing upon ONGC Videsh the ‘navratna’ designation last August, the government and Reserve Bank of India (RBI) have granted the company permission to engage in capital expenditures without any cap and to raise financing from both local and foreign markets.

Fitch confirmed ONGC Videsh’s credit rating at ‘BBB-‘ later that month, keeping it consistent with both the sovereign and its parent.

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