India's Sun Pharma misses debt fundraise goal as investors demand higher yields, bankers say

Sun Pharmaceutical Industries

Today 11:27

By Dharamraj Dhutia
MUMBAI, Oct 22 (Reuters) - India's Sun Pharmaceutical Industries SUN.NS fell short of its targeted debt fundraise as investors continued to demand higher yields, three merchant bankers said on Thursday.
 
Here are a few details: 
The country's largest drugmaker by market capitalisation raised only 78.16 billion rupees ($823.65 million) through the sale of two sets of over five-year bonds, comfortably lower than target of 100 billion rupees, the bankers added.
The bankers requested anonymity as they are not authorised to speak to the media. Sun Pharma did not immediately respond to a Reuters email seeking comment
The shortfall appears to be more a reflection of market pricing than concerns over its creditworthiness, said Saurav Ghosh, co-founder of Jiraaf, an online bond trading platform
"With India's 10-year bond yield crossing 7.4%, the spread between sovereign and AAA-rated corporate bonds has narrowed. At the proposed coupons, investors may see limited additional compensation for taking corporate exposure, particularly in a rising interest rate environment."
The issuer had plans to raise up to 30 billion rupees through the first tranche, which has a put option at the end of 17 months, and 70 billion rupees through the second tranche, a plain 5-year bond 
The company accepted bids worth 20.03 billion rupees and 58.13 billion rupees on these issues 
Anchor investors accounted for a total of 21 billion rupees of bid
The company will pay annual coupons of 8.05% and 8.20% on these papers and had invited bids earlier in the day, the bankers said
The proceeds would be used to partly fund a bridge loan that Sun Pharma took to acquire US healthcare firm Organon & Co. 
($1 = 94.8950 Indian rupees)

 (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)
 ((Dharamraj.Dhutia@thomsonreuters.com;))