A tale of two loans: Banks queue up for BPCL, put Vodafone Idea on hold

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₹55,000 crore, have evoked disparate reactions from bankers. While lenders are salivating at Bharat Petroleum Corporation Ltd’s (BPCL’s) ₹32,000 crore loan proposal, they are circumspect on lending to Vodafone Idea, which is looking to raise ₹23,000 crore through loans to strengthen and expand its network. Combined, the two loans equate to about 2% of the outstanding loans to large industries.

Three bankers who have been involved in discussions with both firms said they were keen on lending to state-owned BPCL, given the strength of its balance sheet and strong sovereign backing. The company, they said, has appointed SBI Capital Markets (SBI Caps) as its transaction advisor for the 15-year loan deal. The public-sector undertaking (PSU) is looking to raise money for capital expenditure at its Bina Refinery and has set the minimum loan by an individual bank at ₹1,600 crore.

Also read: No gain for Vodafone Idea from parent's 18% stake sale in Indus Towers “The loan is expected to be benchmarked to State Bank of India’s three-month marginal cost of fund-based lending rate (MCLR), which is currently at 8.3%," said one of the bankers cited above. “Such loans are priced with a 5-10 bps margin over the benchmark, and individual banks will propose their rates to join the deal." A fourth banker, who is only involved in the discussions with BPCL, said all major banks were keen on lending to the PSU. In May 2023, BPCL announced plans to spend ₹49,000 crore to increase its presence in petrochemicals and renewable energy.