RIL to raise $1.5 billion in overseas debt

MUMBAI: Reliance Industries, the biggest private sector company in India, is meeting investors to raise as much as $1.5 billion in its first bond sale amid improving perception about Indian companies and the economy after Narendra Modi became the prime minister.

The company has given a guidance of pricing it at 245 basis points above the yields on the 10-years US treasury, said two people familiar with the negotiations. The company is looking at $1 billion and with a tenor of 10 years. If the pricing gets finer, it could take an additional $500 million, said two people familiar with the developments.

Chances are the company could even extend the tenor to 30 years if investors are keen on it. Final pricing will be available on Thursday morning.

Ten-year US treasuries are trading around 1.8%. That essentially means Reliance would pay 4.25% compared with domestic borrowing costs of 10% from the Indian banking system.

Bank of America Merrill Lynch, Citigroup, HSBC and Standard Chartered are the joint global coordinators for the sale. Barclays, Deutsche Bank, JP Morgan and Morgan Stanley are book runners. The company last month had planned to sell bonds, but had to postpone since rates tightened, said one of those persons.

The refineries-to-retail company plans to invest billions of dollars in its telecom and retail businesses.

Its chairman Mukesh Ambani told recently that the group plans to invest Rs 1 lakh crore in Gujarat alone where it runs the world’s biggest single location refinery complex.

Moody’s Investors Service has rated the senior unsecured bonds Baa2. Standard & Poor’s, which rated the issue at BBB+, said it expects RIL to complete most of its projects by March 2016.