This is the largest ever foreign currency bond transaction in India, eclipsing ONGC Videsh Limited’s 2014 bond issuance of USD 2.2 billion.
The country’s most valuable company, Reliance Industries Ltd, on Thursday said it has raised $4 billion (about Rs 30,000 crore) in debt through the largest ever foreign currency bond issuance by an Indian entity.
The oil-to-telecom conglomerate plans to use the proceeds of three tranches to pay back existing borrowings.
“The issue was oversubscribed by almost 3 times with a peak order book of approximately $11.5 billion,” the company said in a statement.
This is the largest ever foreign currency bond transaction in India, eclipsing ONGC Videsh Limited’s 2014 bond issuance of USD 2.2 billion.
Reliance raised $1.5 billion in a 10-year issue at a coupon or interest rate of 2.875%, $1.75 billion in a 30-year deal at 3.625% and $750 million in a 40-year issue at a coupon rate of 3.75%.
This is the first time a BBB-rated Asian company outside Japan has issued a 40-year dollar bond.
Bonds with 10-year, 30-year and 40-year maturities are due for repayment between 2032 and 2062.
Reliance plans to use the money to pay off some of its existing debt, including a debt of $1.5 billion maturing in February.
The company said the bonds have coupons (interest rates) linked to the US Treasury. The 10-year notes will have a coupon rate that is 1.2 percentage points higher than the 10-year US Treasury note, the 30-year bond will offer 160 basis points over the respective US government bond and the 40-year note will offer 170 basis points over the respective US Treasury note. on points.
This, it said, represents the “toughest vested credit spread ever” on US Treasury notes by an Indian company.
Notes is rated BBB+ by S&P and Baa2 by Moody’s.
Stating that with this, it has joined a select group of issuers from Asia to issue jumbo bonds, Reliance said, raising 53% of the funds from Asia, 14% from Europe and 33% in the United States. went.
In terms of investor profile, 69% went to fund managers, 24% to insurance companies, 5% to banks and 2% to public institutions.
“This transaction is significant in various respects – (it) the largest ever foreign currency bond issuance from India, the tightest ever vested credit spread by an Indian corporate to the respective US Treasury in each of the 3 phases.” , the lowest coupon received for benchmark 30-year and 40-year issuance by a private sector BBB corporate from Asia ex-Japan, and the first 40-year tranche by a BBB private sector corporate from Asia ex-Japan,” the statement stated in.
Reliance is a net-zero debt firm with a cash balance of ₹2.59 lakh crore, which is more than its gross debt of ₹2.55 lakh crore as of September 30, 2021.
Moody’s Investors Service said earlier this week that its current cash, along with expected cash inflows from operations, would be sufficient to cover its cash outflows for capital expenditures and debt maturities over the next 18 months.
In November 2021, it received an income of around ₹26,600 crore from the last call on its rights issue, which further boosted its liquidity.
Reliance said interest on the notes would be payable half-yearly in the outstanding balance, and the notes would be par with all other unsecured and unsecured liabilities of the firm. The proceeds of the bond will be used primarily to refinance existing borrowings.
Srikanth Venkatachari, Joint Chief Financial Officer, RIL, commented, “We are extremely pleased with the strong result of our multi-tranche long-issue USD bond issue, which not only issued the largest debt capital market transaction of $4 billion but also the strictest. Credit spreads over each of the longest standing periods for any corporate in India”.
“The support received from marquee international capital market investors reflects the strength of our underlying businesses with established growth platforms in energy, consumer and technology as well as the strength of our balance sheet. The issue continues Reliance’s tradition of being a sophisticated and innovative issuer in its capital structure.” BofA Securities, Citigroup and HSBC acted as joint global coordinators.
BofA Securities, Citigroup, HSBC, Barclays, JP Morgan and MUFG acted as joint active bookrunners.
ANZ, BNP PARIBAS, Credit Agricole CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard Chartered Bank and State Bank of India, London Branch acted as Joint Passive Bookrunners.
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