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CFO sees PGCIL dollar bonds gain on Obama re-election

India’s largest transmission provider expects to price at about 250 bps more than similar-maturity Treasuries
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First Published: Thu, Nov 15 2012. 08 41 PM IST
Power Grid is raising money as it plans `1 trillion of spending to upgrade its network after India’s power grid collapsed in July, the world’s worst blackout. Photo: Pradeep Gaur/Mint
Power Grid is raising money as it plans Rs.1 trillion of spending to upgrade its network after India’s power grid collapsed in July, the world’s worst blackout. Photo: Pradeep Gaur/Mint
Updated: Thu, Nov 15 2012. 09 28 PM IST
The treasurer of Power Grid Corp. of India Ltd (PGCIL), selling dollar bonds for the first time, says US President Barack Obama’s re-election will sustain a rally that cut borrowing costs to a 17-month low.
The country’s largest transmission provider expects to price at about 250 basis points (bps) more than similar-maturity Treasuries, or 40 bps less than Bharat Petroleum Corp. Ltd paid in the latest Indian offering. Average premiums for the nation’s dollar debt tightened 48 bps to 372 this quarter and reached the lowest since May 2011, HSBC Holdings Plc data shows.
Global corporate spreads fell 14 bps to 158, according to Bank of America-Merrill Lynch indexes. A basis point is one-hundredth of a percentage point.
“We will be able to do much better than the last issue as there is an assurance that quantitative easing will continue,” finance director R.T. Agarwal, 56, said in a telephone interview from New Delhi on 7 November. “The flow of funds to emerging markets will continue.”
Obama’s win over Mitt Romney helps ensure that Ben Bernanke will stay chairman of the Federal Reserve and bolster buying of bonds to stimulate the global economy. Indian company international note sales surged to an all-time high of $5.13 billion in the third quarter, as monetary easing drove flows into emerging-market debt funds toward a record this year.
The company is raising money as it plans Rs.1 trillion of spending to upgrade its network after India’s power grid collapsed in July—the world’s worst blackout. The electricity transmitter, based in Gurgaon, expects to sell the 10-year notes by 15 December, Agarwal said. It hired Standard Chartered Plc, Barclays Plc and Royal Bank of Scotland Group Plc to arrange the sale, a person familiar with the matter said on 5 November.
“Power Grid’s issue should be received well among investors and can make the road clear for other issuers,” Walter Rossini, who manages about $200 million in Indian assets at Aletti Gestielle SGR SpA in Milan, said in a telephone interview on 7 November. “The spread narrowing shows the positivity of investors for paper of Indian companies.”
Money flowing into emerging market debt funds increased more than $600 million in the week ended 7 November, on track for a record year, according to Cambridge, Massachusetts-based research firm EPFR Global . The Fed announced a third round of quantitative easing on 13 September, while European Central Bank president Mario Draghi said last week that the bank stands ready to start buying bonds. Bloomberg
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First Published: Thu, Nov 15 2012. 08 41 PM IST
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