New Delhi : ONGC Videsh Ltd is looking to raise $ 500 million to $ 1.1 billion through a US dollar bonds issue to funds its acquisition of 15 per cent stake in Russia’s Vankor oilfield.
Global rating agencies Moody’s and S&P have assigned long-term issue rating to the bond issuance. While Moody’s Investors Service assigned a Baa2 rating representing a relatively low-risk, S&P assigned ‘BBB-‘ long-term investment grade rating reflecting opinion that issuer has the current capacity to meet its debt obligations.
Both ratings allow banks to invest in such rated bonds. An official claimed neither Moody’s nor S&P has given OVL’s bonds a ‘low investment grade rating’ as reported by some sections on Wednesday. He added there is no change in OVL’s issuer ratings and it is the same as previously assigned. According to Moody’s, it uses nine rating symbols — Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C — the first showing least credit risk and the last denoting greatest credit risk. Among these, the first four are classified as ‘investment grade’ and the last five as ‘speculative grade’ ratings by Moody’s.
In case of S&P, the investment grade ratings are BBB- or higher, while it is Baa3 or higher for ratings by Moody’s, reports PTI.
In a statement, Moody’s had said on Wednesday that it “has assigned a Baa2 rating to the proposed foreign currency senior unsecured bonds to be issued by ONGC Videsh Vankorneft Pte Ltd (OVVPL), a wholly owned subsidiary of Oil and Natural Gas Corporation (ONGC)”. S&P had said in a separate statement that the state-owned company will “unconditionally and irrevocably guarantee the notes”. “We consider the proposed notes as ONGC’s debt obligation because the notes are issued by a 100 per cent-owned subsidiary set up to raise funds for ONGC,” it had added. ONGC Videsh, the overseas arm of ONGC, expects to use the proceeds of the proposed notes to refinance existing bridge loans incurred to acquire a 15 per cent stake in CJSC Vankorneft for USD 1.26 billion.
