IL&FS raises $92 mn from Chinese market through 3-year bonds

The overseas arm of Infrastructure Leasing & Financial Services, India's leading infrastructure lender and toll road operator, has raised 575 million yuan (around $92 million) from the Chinese debt market.

The three-year bonds, floated by IL&FS Transportation Networks Pte Ltd (ITNL), will fetch a return of 8 per cent to investors. The debt was raised by IL&FS Transportation, the holding company of ITNL, merchant bankers to the deal told PTI on Friday.

This is the first unrated bond sale from a domestic issuer in the Chinese debt market. 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 13,100 km of lanes in its portfolio.

The company had given an initial pricing guidance of 8.37 per cent but because of high demand, which touched 2.1 billion yuan, or 3.8 times the order-book, the pricing got tightened by 37 basis points at close, sources at the merchant banks, which included Barclays India and CLSA, said.

The bonds will be listed on the Hong Kong Stock Exchange. IL&FS Transportation or ITNL could not be reached for comments.

Earlier, ICICI Bank had sold 500 million yuan bonds, making it the first issue from an Indian lender. The Chinese financial market is yet to be tapped by domestic corporates who prefer the Western markets to sell their debt instruments.

However, the merchant bankers said the current issue reopens the large Chinese debt market to Indian corporates. ITNL, the execution arm of IL&FS' foreign projects, has an under-construction toll road project in China - Chongqing-Yuhe Expressway - in which it holds a 49 percent equity consideration. It also has operations in Portugal, Spain, Ukraine and Latin American markets.

IL&FS Transportation is a leading player in the sector with presence in metro rail space, city bus services and border check-posts. Recently, it acquired Elsamex of Spain, which is into highway operations, maintenance and allied services.

The over 25-year-old Infrastructure Leasing & Financial Services 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.