Reliance Industries to raise Rs 12,500 crore via five-year bonds

Mumbai: Reliance Industries, India's biggest company by market value, is raising ₹12,500 crore in a five-year bond issue, with Axis Bank, HDFC Bank, ICICI Bank and Yes Bank among the lenders arranging the transaction, bankers said.

The bonds are expected to be priced at around 7.47%. Axis Bank is expected to have the largest allocation of these bonds, followed by ICICI Bank, HDFC Bank and Yes Bank, people familiar with the transaction said.

The issue is scheduled to close on September 18.


The transaction comes as Indian banks see increased liquidity from a surge in foreign currency deposits, giving them more funds to deploy toward corporate lending, bankers said.

Individual banks and a Reliance spokesperson did not immediately respond to requests for comment.

The issue comprises a ₹10,000 crore base size and a ₹2,500 crore greenshoe option. About ₹3,000 crore of the issue was placed with anchor investors, while the remaining portion has also been fully subscribed, according to people familiar with the transaction.

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The latest issue is Reliance Industries' first major foray into the domestic bond market since 2023. Its previous retail bond issue in 2023 was for a longer 10-year maturity and saw significant participation from Life Insurance Corporation of India.

LIC is not a significant investor in the current issue, partly because of the shorter five-year maturity and the strong liquidity available with banks, people familiar with the transaction said.

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The transaction comes after Indian banks mobilised a record amount through FCNR(B) deposits under the Reserve Bank of India's (RBI) special swap facility. Banks raised $127.2 billion through the scheme by August 31, taking total inflows under the special schemes to $136.4 billion.

Also, lenders are assessing how to deploy the large pool of liquidity mobilised. The large inflows have left banks with significant foreign-currency liquidity that needs to be deployed.

ICICI Bank alone mobilised $17.88 billion through FCNR(B) deposits, while the bank also issued $3.55 billion of dollar-denominated bonds during July-August. However, banks have so far been cautious about aggressively deploying the funds, as is visible at the short end of the interest-rate curve.

"The short end, the rates have come off, so that is very visible. But whether it will percolate into the long end remains to be seen," said a person familiar with the strategy of banks, pointing to uncertainties around geopolitics, crude oil prices and global bond yields.

For banks, the key avenues for deployment of this liquidity are going to be corporate loans, project finance, corporate bonds, working capital or other assets. However, some experts say the additional FCNR liquidity may also translate into faster corporate credit growth in the coming quarters, or could put pressure on lending spreads as banks compete for deployment opportunities.

"The biggest impact of the FCNR (B) deposits will be for banks in India, which in the last three years have been deposit constrained, and have relied incrementally on wholesale funding through the CD market, to see a greater availability of funds," BofA said in a recent research report.

BofA estimates that this could ultimately result in "unencumbered credit creation of ₹25-40 lakh crore," equivalent to 7-11% of India's GDP or 11.5-18% of existing non-food credit extended by banks over a two-to-three-year period.