ONGC Videsh Secures USD 800 Million Loan to Repay Existing Borrowings

ONGC Videsh Limited, a wholly-owned subsidiary of ONGC, has secured a USD 800 million loan facility to refinance its existing debt obligations. This move comes following a news article in The Economic Times dated July 6, 2024, titled "ONGC Videsh to raise USD 800 million from 3 banks," which initially sparked market interest and queries to the company.

To address its debt maturity, ONGC Videsh had issued USD 750 million bonds on July 15, 2014, and had an outstanding balance of USD 80 million from a USD 500 million syndicated term loan facility agreement dated July 2, 2019.

In April 2024, the company launched an RFP for raising funds, followed by technical and price bid openings in May 2024. The mandate was eventually issued to Axis Bank Ltd., Bank of Baroda, and DBS Bank Ltd. on May 31, 2024.

The facility agreement, finalized for USD 800 million, was executed on June 26, 2024. Subsequently, the drawdown notice was issued on July 4, 2024, and the funds were utilized on July 12, 2024, to discharge the maturing debt obligations.

ONGC Videsh emphasized that the company had made all requisite disclosures as per SEBI (LODR) Regulations, 2015, and clarified that the loan facility, backed by the parent company's guarantee, did not require additional disclosure.

This financial maneuver allows ONGC Videsh to effectively manage its borrowing portfolio, with no anticipated direct material impact on its operational dynamics.

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Market Reaction

Investors on the National Stock Exchange (NSE) responded cautiously to ONGC's recent announcements during the period from July 6 to July 12, 2024. Following the news of ONGC Videsh securing a USD 800 million loan to repay existing borrowings, ONGC's stock (ONGC) showed varied market movements.

On July 12, 2024, the stock opened at ₹306.80, peaked at ₹311.75, and closed at ₹307.35, with a trading volume of 3,17,88,101 shares. This indicates a mixed sentiment among investors, possibly reflecting ongoing market adjustments to the financial decisions and strategic moves by ONGC and its subsidiaries.

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ONGC Videsh 

ONGC (Oil and Natural Gas Corporation Limited) is India's flagship national oil company with extensive capabilities in oil and gas exploration, production, and related services. With a workforce of approximately 26,000 professionals, ONGC operates across challenging locations, earning recognition as a Best Employer.

Its subsidiary, ONGC Videsh Limited, focuses on international oil and gas exploration and production, owning interests in 35 assets across 15 countries. ONGC Videsh contributes significantly to India's petroleum sector, ranking as the country's second-largest petroleum company in terms of reserves and production.

ONGC also oversees subsidiaries like Mangalore Refinery and Petrochemicals Limited (MRPL) and Hindustan Petroleum Corporation Limited (HPCL), enhancing its presence in refining, petrochemicals, and petroleum product distribution across India.