IOC launches tender to raise $600m SOFR-linked syndicated loan

Indian Oil has issued a tender to banks to raise a syndicated loan linked to the Overnight Funding Rate (SOFR) of $600 million (approximately ₹4,518 crore) to repay past loans that have been benchmarked at the London Interbank Offered Rate, or LIBOR, multiple sources told ET.

LIBOR has been replaced by SOFR as the internationally acceptable reference rate since January 1.

India’s largest oil refiner and fuel retailer will raise the loan in four tranches with maturities ranging from 1.7 to 2.5 years as per details given to banks, sources said. The retailer has launched a firm tender by February 24.

Banks can submit offers to guarantee the loan individually or in consortium with other banks. However, the number of consortium members is capped at three.

Syndication is a method where a small number of banks take out a loan and then market it to other local and international banks who pick up a portion of the total. The loan will be indexed to the 3-month SOFR rate, which was 0.04% on Friday. E-mailed queries to Indian Oil elicited no response.

The oil major accounts for half of India’s petroleum product sales. It has earnings of Rs. 5 million. The company has total borrowings of Rs. 1 million crores. The company owns 11 out of 23 oil refineries in India, has a pipeline network of 15,000 km and has the largest number of fuel outlets. It is also the airline industry’s largest fuel supplier.

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