RIL raises $4 billion in US dollar bonds, the largest such issue by an Indian corporate

RIL Chairman Mukesh Ambani. (PC-MoneyControl)

Reliance Industries has raised $4 billion in the largest ever foreign currency bond issuance from India. The bond issue was subscribed over three times.

Srikanth Venkatachari, Joint CFO of RIL, said in a statement that the mega issue was the largest debt capital market transaction for the company, and had “the tightest credit spreads across each of the long-dated tenors for any corporate in India.”

“The support received from the marquee international capital market investors is reflective of the strength of our underlying businesses with established growth platforms across energy, consumer and technology as well as robustness of our balance sheet. This issue continues the tradition of Reliance being a sophisticated and innovative issuer across the capital structure,” he added.

The conglomerate’s jumbo note issuance of US dollar bonds was done in three tranches – $1.5 billion for 10 years at 2.875%, $1.75 billion for 30 years at 3.625% and $750 million for 40-year term and 3.750% coupon rate. The proceeds will mainly be used for refinancing existing borrowings. Part of it will go towards refinancing of $1.5 billion worth of debt that is due to mature in February.

The notes have been priced competitively at 120 basis points, 160 basis points and 170 basis points over the respective US Treasuries benchmark. The issue has the lowest coupon achieved for benchmark 30-year and 40-year issuances and is the first ever 40-year tranche by a ‘BBB’ rated private sector corporate from Asia, excluding Japan.

RIL said that the notes received orders from over 200 accounts in Asia, Europe and the United States. “The notes were distributed to high quality fixed income accounts: 69% to fund managers, 24% to insurance companies, 5% to banks and 2% to public institutions,” the company said.

Rating agency Moody’s had rated the bond ‘Baa2’ while S&P Global Rating gave it ‘BBB+’; both had a ‘stable’ outlook on the bonds. The interest on the notes will be payable semi-annually in arrears, and the notes shall rank at par with all other unsecured and unsubordinated obligations of RIL.

RIL did not reveal the name of the investors who subscribed to the bonds. But market sources said that the bidders included– Hong Kong-based BFAM Opportunities Fund, China Life Insurance, Mizuho Bank, Fidelity, Singapore-based UOB Asset Management, among others. A query sent to RIL awaits response.

BofA Securities, Citigroup and HSBC were the joint global coordinators to the issue. BofA Securities, Citigroup, HSBC, Barclays, JP Morgan and MUFG acted as joint active bookrunners. ANZ, BNP PARIBAS, Crédit Agricole CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard Chartered Bank and SBI London Branch were the joint passive bookrunners.

Reliance Industries turned net debt free in June 2020 after it raised Rs 168,818 crore in two months through the country’s largest ever rights issue and series of stake sale deals in its businesses. Experts tracking the sector said that the jumbo fund raising through the US bonds will bring down its cost of funds even more and will make the repayment tenure longer.

At 14:30IST, shares of RIL were trading at Rs 2425.00 on the BSE, down 1.7% from the previous close. The benchmark index Sensex was down 0.8%.

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