Why IL&FS could not raise money overseas?
A proposed overseas bond deal by toll road developer IL&FS Transportation Network has failed to see the light of the day amid surging US Treasury yields that increases borrowers’ cost.
“After achieving an order book in excess of the bench mark size, the Company decided to postpone the proposed US$ benchmark 5-year fixed-rate senior unsecured Reg-S bond due to unfavorable market conditions and its inability to achieve the desired pricing,” said a spokesperson.
The proposed bond sale attracted investors, who were claiming 7% rate that the issuer declined to pay, sources said.
“This was an unrated paper without any sovereign support. Hence, it was difficult to sell such papers to global investors, who are mostly driven by credit ratings,” said a person involved in the process.
ITNL Offshore Pte. Ltd, a subsidiary was supposed to be the issuer of bonds.
The benchmark US Treasury yield shot up to four-year high at 2.92% and remains elevated in the past few weeks.
Earlier in January, ITNL raised $155 million (1 billion yuan) by issuing yuan-denominated bonds, popularly called ‘dim sum’ bonds with three-year maturity.
ITNL reported a net profit of Rs.60.34 crores for the period ended December 31, 2017 as against Rs.55.66 crore in the corresponding period a year earlier.