RIL launches India Inc's biggest bond sale abroad

Mumbai: Reliance Industries Ltd (RIL) launched its mega bond sale Wednesday as the company sought to raise $3-5 billion from offshore investors. This will be the largest-ever bond sale by an Indian company tapping overseas money and the year's first fundraising from the country. The proceeds will be used primarily to refinance existing debt with a likely funding cost benefit. Parts of it can also be used for financing capital expenditure or general corporate purposes.

It received bids to the tune of about $11-12 billion, which is known as order book size in market parlance, said people with knowledge of the matter. Global bidders are said to have included PIMCO, Fidelity, BlackRock, Eastspring, Agriculture Bank of China, Mizuho Bank, Singapore-based UOB Asset Management, Hong Kong-based BFAM Opportunities Fund and China Life Insurance.

The final allocations did not happen until the press time. RIL may retain about $4-4.50 billion subscriptions, sources said.

Bonds are of 10, 30 and 40 Years Tenors
They RIL did not respond to ET's queries. Investors could not be contacted immediately for comments.

ET reported first on December 31 that RIL was planning to raise up to $3 billion via offshore bonds, and more than that depending on the investor response.

The bonds are of three tenors-10, 30 and 40 years. They were initially to be priced at a spread or markup of 150 basis points, 190 bps and 205 bps over similar maturity US treasuries, respectively. They finally yielded 30 basis points lower in the 10-year and 30-year series and 35 basis points for the 40-year securities.

Barclays, Bank of America, Citigroup, JPMorgan, MUFG and Standard Chartered Bank are among those working with the company to raise the money overseas.

The proceeds will be used to refinance existing loans and debt raised from international investors earlier. Bonds worth $1.5 billion at a 5.4% coupon rate are maturing in February. Besides, loans are due for repayment in the next three-four months.

Moody's Investors Service assigned a Baa2 rating to the RIL offshore bonds with a stable outlook. The grade is a notch above the lowest investment grade rank. "RIL's high dependence on the Indian economy through its digital services and retail businesses constrains its rating to one notch above that of the Indian sovereign rating," said Sweta Patodia, a Moody's analyst.

The company's earlier announcement about transferring its gasification undertaking to a wholly owned subsidiary while re-evaluating the planned transfer of its O2C business to a separate unit will not have any impact on the credit profile, according to Moody's.

"The oil-to-retail conglomerate has enough liquidity, which allays global investor apprehension amid spreading virus infections," said a senior executive aware of the matter.

The company's liquidity is further supported by its strong banking relationships and access to domestic and international capital markets.

In November 2021, RIL received about Rs 26,600 crore in proceeds from the final call on its rights issue, which also enhanced its liquidity.