Mumbai, June 15: Global investment banks have turned bullish on the $1.2 billion syndicated loan offerings by domestic telecom and oil sector operators.

Roadshows will begin to syndicate the loans of two major projects within the next two weeks—the $112 million Tata-Bell Canada, and the $ 300 million Reliance Petroleum loans. Scheduled for syndication later on are a $300 million (or more) offering by Reliance-Nynex, and Escotel Cellulars' $129 million loan lead managed by Chase Manhattan.

These upcoming offerings -- all by greenfield ventures -- comes close on the heels of the success of the eight-and-a-half year $283 million Birla-AT&T loans, and a secured $175 million foreign currency convertible bond (FCD) issue by the Indian Petrochemicals Corporation Ltd (IPCL), a public sector undertaking.

The indicative coupon rates of the Tata Bell and Reliance Petroleum loans are in the range of 200-215 basis points over Libor. Investment bankers like ANZ Investment Bank's (ANZIB) global project finance director, Stephen Crew, feel that "global investors are ready to discount the Moody's Baa3 country rating to a certain extent".

Sources in Chase Manhattan feel that "international investors are comfortable with telecom and oil projects...risk distribution is easy in telecom as the players are more. In the case of the oil, the product is priced in US dollars, offering a good hedge". In the next few days, BankAm and Toronto Dominion of Canada will syndicate a jointly underwritten nine-year $112 million loan for Tata-Bell Canada. The foreign currency component in the transaction works out to approximately Rs 276 crore ($77.5 million) while the remaining Rs 125 crore ($35 million) is the rupee portion.

Lead managers to the Tata-Bell loan syndication feel that the response will be excellent given that the recent $283 million Birla-AT&T loan syndication, which saw bidding by both international and domestic players. Among them: Union Bank of Switzerland (UBS), Merrill Lynch, ICICI, IDBI, SBI and Bank of India. Reliance Petroleum's upcoming $300 million 10-year foreign currency loan, fully underwritten by BankAm, ABN Amro Bank, Bankers Trust, and Toronto Dominion, will be on the block next. Priced at 200 basis points over Libor and underwritten to the extent of $75 million each by all the four lead managers, the success of the deal is a foregone conclusion.

Appetite for Indian paper can be gauged from the fact that BankAm recently stood in as guarantor to the seven-year $175 million foreign currency convertible bond offering of IPCL. The IPCL offering with a BankAm guarantee is the first `fully secured' convertible offering by an Indian corporate.

Investors to IPCL's $175 million offering can trade in the bonds or the conversion options or both.

Interest for telecom paper is particularly interesting. Both the $283 million Birla-AT&T, and the $112 million Tata-Bell loans were fully underwritten despite both being greenfeild ventures. The projects also have no promoters' guarantees.

"The appetite for these loans are a reflection of international promoters strength and viability of the domestic joint ventures", said an investment banker.

Power projects though continue to stutter. For example, commitments to the syndication of a $1.2 billion Cogentrix loan to be lead managed by ANZ Investment Bank (ANZIB) and the Union Bank of Switzerland (UBS) remains stuck in the works despite sovereign guarantees. Even Dabhol Power Company's (DPC) Phase I funding, with a backup sovereign guarantee, had a coupon rate 300 basis points over Libor pegged to the foreign currency loans.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.