Nayara Energy likely to raise up to Rs 2,500 cr

Nayara Energy likely to raise up to Rs 2,500 cr

New Delhi/Mumbai: Rosneft-backed Nayara Energy, formerly Essar Oil, is planning to raise as much as Rs. 2,500 crores in bond sales, harnessing better credit rating to retire some expensive loans contracted by the erstwhile Ruia-run company.

It is said to have reached out to Standard Chartered Bank, Axis Bank and ICICI Bank and mutual funds such as Birla, ICICI Prudential and NIPPON, market sources told ET.

“Discussions are on as the company is looking to raise in the range of Rs 1,500-2,500 crore,” said one of the persons cited above. The proceeds will help refinance some of its older expensive debt coming up for repayments later this year, according to people with knowledge of the matter.

Individual investors could not be contacted immediately for comments.

“The proceeds are expected to be used to refinance an old series of bonds, which are maturing in August,” said one of the persons cited above.


The proposed bonds will likely have tenures of three or five years and come cheaper due to the benign credit environment.

The bonds, which were sold three years ago at a coupon of 9.5 percent, are maturing in August this year. For the new bonds, the coupon could be lower by 100-150 basis points, dealers said.

Nayara didn’t respond to ET’s request for comments. Nayara Energy, owned by Russian energy giant Rosneft, global commodity trading firm Trafigura and UCP Investment Group, operates a 20 million tonnes a year refinery at Vadinar in Gujarat. It is adding a petrochemical facility near its refinery and needs new debt to finance it. The company operates about 6000 fuel retail outlets across the country and plans to further expand to 7,600 outlets by the end of 2024.

Local rating company CARE Ratings graded Nayara’s bonds known as non-convertible debentures in market parlance AA (Stable outlook). The company formerly known as Essar Oil was rated single-A on credit watch in December, 2016.

“Nayara’s refinery has one of the highest complexities across refineries in India, a Nelson Complexity Index (NCI) of 11.8,” the rating company said in a report last month.

“Due to high complexity of refinery, Nayara is easily able to process heavier grades of crude oil resulting in higher margins when compared with low complexity refineries,” it said.

The company during the past few years has processed more than 60% of ultra-heavy, 30% of heavy and remaining light crude.

Sikka Ports and Terminals Ltd (SPTL), a Reliance Industries Limited (

) promoter group company, is also raising Rs 4,000 crore from a group of three large private sector lenders comprising Axis Bank, and ICICI Bank, ET reported on April 18. Those are five-year papers likely offering 6.75%.

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