Reliance raises $4 bn in India's largest-ever foreign currency bonds issue
- IBEF
- January 7, 2022
On Thursday, Reliance Industries Ltd, India's most valuable corporation, announced that it had raised US$ 4 billion debt in the country's largest-ever foreign currency bond offering.
The oil-to-telecom company raised the funds through foreign currency bonds and intends to utilise the revenues to pay down current debt.
According to a company release, the issuance was almost 3 times oversubscribed with a peak order book aggregating US$ 11.5 billion and was priced through RIL's secondary curve.
The company raised US$ 1.5 billion at a coupon rate of 2.875%, US$ 1.75 billion at a coupon rate of 3.625%, and US$ 750 million at a coupon rate of 3.75%. The notes must be paid back between 2032 and 2062. It stated that "The Notes have been priced at 120 basis points, 160 basis points and 170 basis points over the respective US Treasuries benchmark."
S&P gives the Notes a BBB+ rating, while Moody's gives them a Baa2 rating. Reliance has joined a select group of Asian issuers who have issued jumbo bonds as a result of this. It is an Indian corporate's tightest ever implied credit spread over the respective US Treasury across each of the three tranches, the lowest coupon achieved for benchmark 30-year and 40-year issuances by a private sector BBB corporate from Asia ex-Japan, and the first-ever 40-year tranche by a private sector BBB corporate from Asia ex-Japan.
As of September 30, 2021, Reliance had a cash position of Rs 2.59 lakh crore (US$ 34.77 billion), which exceeded its total debt of Rs 2.55 lakh crore (US$ 34.23 billion).
According to Moody's Investors Service, the company's existing cash, as well as forecast cash flows from operations, will be sufficient to fund its cash outflows for capital spending and debt maturities over the next 18 months. It received roughly Rs 26,600 crore (US$ 3.57 billion) in proceeds from the final call on its rights issuance in November 2021, boosting its liquidity even more.
Interest on the Notes will be paid semi-annually in arrears, according to Reliance, and the Notes will rank pari passu with the firm's other unsecured and unsubordinated obligations. The profits from the bond will mostly be used to refinance current debt. Over 200 customers in Asia, Europe, and the United States placed orders with the Notes.
The Notes were dispersed in Asia (53%), Europe (14%), and the United States (33%). They were allocated to high-quality fixed-income accounts in the following proportions: 69% to fund managers, 24% to insurance companies, 5% to banks, and 2% to public entities.
Joint Global Coordinators were BofA Securities, Citigroup, and HSBC.
Joint Active Bookrunners were BofA Securities, Citigroup, HSBC, Barclays, JP Morgan, and MUFG.
Joint Passive Bookrunners were ANZ, BNP PARIBAS, Credit Agricole CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard Chartered Bank, and State Bank of India, London Branch.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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