Reliance Industries raises $750 million from overseas bond issue

PUNE: Reliance Industries, India’s largest private sector company by revenue, has raised $750 million (about Rs 4,500 crore) by selling 30-year maturity bonds to international investors. This is the second such offshore fund raising by the company this year.

The bonds were priced 262.5 basis points (bps) above the 30-year US treasury bonds. The final yield came at 4.875%. The US treasury has dipped to a record low and is now yielding 2.36% as prices have moved up. The spread over the US treasury was about 20 bps lower than expected initially. Investment bankers were expecting a 285-bps addition over and above the US treasury.

The finer spread was on the back of high investor demand. Nearly two weeks ago, the company had mopped up $1 billion through similar bond sales, but with 10-year maturity at 4.125%. The spread was 240 bps over and above similar maturity of US treasury bond yields. The latest issuance was oversubscribed more than three times with the order book aggregating $2.3 billion. “RIL is the only private corporate issuer out of Asia with a 30-year issuance since 2003,” said Pushkaraj Gumaste, head of client coverage, Barclays India.

“Raising a 30-year $750 million bond at sub-5%….should be read in the context of the company having successfully raised $1 billion in 10-year funds over the last fortnight at an equally attractive level.” In terms of geographic distribution, the notes were distributed 47% in Asia, 8% in Europe and 45% in the US. The notes were distributed to high quality fixed income accounts: 52% to fund managers, 31% to insurance, 8% to pension funds, 6% to central banks and sovereign wealth funds, 2% to banks, and 1% to private banks.

Bids were received from 167 accounts in Asia, Europe and the US participating in the transaction. RIL continues to be the only Regulation (Reg) S bond issuer in the 30-year maturity category.