Indian cement company launches bond

Gujarat Ambuja Cements issues Rs1 billion deal via HSBC.

Gujarat Ambuja Cements (GACL), India's leading cement manufacturer, has launched its first bond deal of 2002. HSBC Securities and Capital Markets (India) acted as sole lead manager on the Rs1 billion ($20.7 million) transaction.

The five-year fixed rate deal, which was rated triple-A by Fitch, offers a nominal rate of 9.28%, to be paid semi-annually. As it was priced at a discount of 99.99, the bonds real yield is 9.29%, 203bp over five-year government paper.

HSBC said the offering was placed privately with domestic institutional investors including mutual funds, insurance companies and banks.

While acknowledging HSBC's own role in successfully placing the deal, Zarir Cama, chairman of HSBC Securities and Capital Markets in India, also comments it was a reflection of strong investor appetite for local corporate paper.

"HSBC is one of the most active players in the debt market and has been instrumental in helping corporates raise funds through the debenture route," he says. "The successful arrangement of the Gujarat Ambuja Cements issue marks a reiteration of our capabilities as well as the onset of a positive sentiment onto the corporate bond markets in 2002."

If demand is as strong as Cama expects, it should be happy days for Indian corporate issuers in the coming months. Interest rates have come in significantly within the last year, as highlighted by the contrast in pricing between GACL's latest deal and the company's previous visit to the market.

GACL issued an Rs2 billion transaction last April, split into Rs1.45 billion of four-year notes and an Rs550 million three-year tranche. The shorter dated notes offered a nominal coupon of 10.65%, currently trading at 303bp over government bonds, while the four-year bonds carry a fixed coupon of 12.3%, 324bp over.

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