Nov. 22 (Bloomberg) -- ONGC Videsh Ltd., the overseas unit of India’s largest oil explorer, is seeking a $1 billion loan, according to a person familiar with the matter.
The facility would have a tenor of five years and banks have been asked to respond with proposals, the person said, asking not to be identified because the details are private.
ONGC Videsh, a unit of Oil & Natural Gas Corp., is raising debt to help finance its $2.64 billion purchase of a 10 percent stake in a Mozambique gas field from Anadarko Petroleum Corp., adding to its interest in the African nation’s energy asset.
In June, ONGC Videsh and Oil India Ltd. bought a 10 percent stake in the same Mozambique gas field from Videocon Industries Ltd., and ONGC Videsh last month hired banks including Australia & New Zealand Banking Group Ltd. and BNP Paribas SA for a $1.5 billion, one-year term loan related to that deal.
“There are two different transactions,” ONGC Chairman Sudhir Vasudeva told reporters on Nov. 13. The $1.5 billion loan will fund the purchase of the stake from Videocon, while a new facility will be used for the Anadarko deal, he said.
Borrowing in dollars has become more attractive for companies in India after the central bank raised the benchmark repurchase rate by 50 basis points, or half percentage point, to 7.75 percent since September.
International loans in India total $4.3 billion so far this quarter, versus $2.4 billion in the three months ended Sept. 30, the lowest in three years, according to data compiled by Bloomberg.
The Videocon deal will close by the end of December, and the stake purchase from Anadarko by February, Vasudeva said.
ONGC Videsh also sought bids from banks last month for a benchmark-sized U.S. dollar-denominated bond, people familiar with that matter said. The notes will be guaranteed by Oil & Natural Gas, those people said.
Oil & Natural Gas has $1.45 billion of dollar-denominated bonds and loans outstanding out of total bonds and loans outstanding of $1.82 billion, Bloomberg-compiled data show.