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

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)