The Indian company Sun Pharmaceutical Industries intends to raise approximately 100 billion rupees, equivalent to about $1.04 billion, through the sale of rupee-denominated debt obligations. These funds are intended to partially finance a bridge loan obtained for the acquisition of the American healthcare company Organon & Co., three sources reported on Tuesday.
Bridge loans are typically short-term borrowings taken before takeover deals to provide financing for the transaction. Later, this loan may be replaced by more permanent financing through bonds or other loans.
The country's largest pharmaceutical manufacturer by market capitalization previously closed a bridge loan syndication worth nearly $12 billion with an 18-month maturity to acquire Organon. The State Bank of India, the country's largest lender by assets, was also part of this syndicate, sources clarified.
Sources requested anonymity as they are not authorized to speak to the media. Sun Pharma did not immediately respond to Reuters' request for comment.
Banks expect that the total volume of domestic corporate debt issuances this year will reach record levels, as higher rates in the US make dollar financing more expensive, forcing companies to seek domestic funding opportunities, one source noted.
Sun Pharma plans to sell shorter-term bonds with maturities of two, three, and four years. This move comes amid attempts by Indian companies to lock in borrowing costs before a potential interest rate hike by the Reserve Bank of India. A rupee debt issuance worth about $3 billion is scheduled in the coming days.