Mumbai: IL&FS Transportation Networks, the international arm of infra company IL&FS, has raised 630 million yuan or about USD 100 million from the Chinese debt market offering a coupon of 5.75 percent, say market sources.
The debt raised by ITNL Offshore, carries an unconditional and irrevocable guarantee of USD 114 million from Exim Bank, as per a note by Fitch, which has also rated the issue at BBB-.
IL&FS Transportation or ITNL could not be reached for comments. A call to their Mumbai office remained unanswered.
ITNL stock was down by 2 percent at Rs 215.20 on the BSE, whose main gauge Sensex plunged 603 points.
This is the second Chinese debt raising by the company, having already raised 575 million yuan last July offering a return of 8 percent, making it the first unrated bond sale from a domestic issuer in the Chinese debt market in the year.
ICICI Bank had also raised 500 million yuan, making it the maiden issue from a domestic bank in 2014.
The Chinese financial market is yet to be tapped by domestic corporates, who prefer the Western markets to sell their debt instruments.
Fitch said issue is supported by a principal account of USD 4 million and a debt service reserve account amounting to one semi-annual coupon payment of around USD 2.4 million.
Fitch said ITNL could mitigate forex risks due to the USD 100 million swap arrangement at 4.8 percent with Deutsche Bank, while the Exim Bank guarantee is available to both the bond investors and the swap provider on a pari passu basis.
Fitch said the guarantee and principal amount will be more than sufficient to meet bond and swap providers' dues under a variety of stress scenarios, therefore BBB- rating.
IL&FS Transportation was formed in 2000 as a wholly-owned unit of IL&FS, and is the largest BOT road asset owner in the country with around 13,100km lane in its portfolio. The last year's issue is listed on the HK Exchange.
ITNL, the execution arm of IL&FS' foreign projects, has a toll road project in China- Chongqing-Yuhe Expressway - in which it holds a 49 percent equity. It also has operations in Portugal, Spain, Ukraine and Latin American markets.
ITNL is a leading player in the transportation sector with presence in metro rail, city bus services and border check-posts. Recently, it had acquired Elsamex of Spain, which is into highway operations, maintenance and allied services.
The over 25-year-old IL&FS is a leading domestic infra development and finance firm, which has capabilities to take projects from concept to commissioning stage. Set up in 1987, the shareholders of IL&FS include LIC, SBI, HDC, Central Bank of India, Orix Corporation of Japan and Abu Dhabi Investment Authority.
