Sun Pharma Plans ₹10,000 Crore Local Debt Sale For Loan Repayment

Sun Pharmaceutical Industries is planning to raise around ₹10,000 crore, or about $1.04 billion, through a rupee-denominated debt sale, according to a report by The Economic Times.

The proposed fundraising is intended to partly refinance a bridge loan that was used to finance the acquisition of US healthcare company Organon & Co. The planned bonds are expected to have shorter maturities.

At the close of trading on 29 September, the Sun Pharma share price stood at 1,865.0 on the National Stock Exchange (NSE), up by almost 1.5%.

Why Is Sun Pharma Planning The Debt Sale?

Sun Pharma is looking to raise funds through the domestic debt market. The proposed borrowing would partly replace financing raised through a bridge loan for the Organon acquisition.

The company had earlier closed a syndication of a near-$12 billion, 18-month bridge loan for the transaction. The bridge financing is intended to be replaced over time with longer-term funding through bonds or loans.

What Will The Proposed Bonds Look Like?

Sun Pharma is expected to issue bonds with maturities of two, three and four years. The proposed debt sale comes at a time when Indian companies are increasingly looking towards the domestic market for funding as borrowing in US dollars becomes more expensive.

The report said the 10-year US Treasury yield was at its highest level since June 2007, adding to global borrowing costs. US yields are also making dollar-denominated funding more expensive, encouraging companies to explore borrowing in the domestic market.

The debt market activity also comes amid expectations of a possible interest-rate hike by the Reserve Bank of India, with companies looking to secure borrowing costs ahead of any such move.

Also Read - Capital India Finance Raises ₹100 Crore Through NCD Issue