“At Rs 2,610 crores, this is among the largest private sector infrastructure bonds issued in India and is the largest bond in the roads sector,” the group said.
The issuer, SP Jammu Udhampur Highway Ltd, will be paying interest semi-annually.
“The large issuance size, the long tenor of the bond and the option to the Issuer to call back part of the bond make the pricing achieved a landmark in the corporate bond market.”
The bonds have various maturities starting Dec 2015 and ending Dec 2030, or around 15 years, making them the longest tenor infrastructure asset backed bond issued in India.
“Proceeds of the bond were used to refinance the Issuer’s existing foreign currency and rupee loans, helping the company to lower its cost of debt and importantly eliminate exchange rate risk of the foreign currency debt.”
SP Jammu Udhampur Highway Limited is a special purpose vehicle of the Shapoorji Pallonji group set up for the design, construction, development, finance, operation and maintenance of a 64.58 km highway stretch between Jammu and Udhampur awarded on a Build, Operate and Transfer (BOT) Annuity basis by the National Highways Authority of India.
“This transaction clearly establishes the viability and attractiveness of the domestic bond market as an attractive source of funding for quality infrastructure assets from credible developers. We have set a benchmark and hope this paves the way for financing of quality infrastructure assets beyond bank loans,” said S. Mukundan, Director.
“This is a marquee deal and should lead the way in financing infrastructure development in the country through debt capital markets,” said Sujata Guhathakurta, Senior Executive Vice President and Head – Debt Capital Markets, Kotak Mahindra Bank — one of the arrangers.
“The deal delivers great value to both the issuer and the investors. We believe that the debt capital markets can provide significant amount of takeout financing to banks for financing infrastructure projects, which are of upmost importance to our country. Kotak has been at the forefront of this initiative, having been one of the first to structure an NHAI Annuity-backed bond in 2010 and now having completed the largest NHAI bond issuance.”
Mr. Hitendra Dave, Managing Director and Head of Global Markets, India for HSBC said: “The deal is among the largest infrastructure project bond from the private sector.. The deal has generated excellent response from the investor community with interest from all the different investor sub categories and across both ends of the duration spectrum. At a broader level, we believe the deal will aid in the development of the domestic corporate bond market by establishing capital markets as an attractive alternative to conventional bank financing for mature infrastructure projects – a development a lot of us have been waiting for for quite a while. We expect this transaction to accelerate this development”