RIL ups deal size of asset-backed notes on strong demand

Reliance Industries has increased the size of its planned asset-backed securities issuance to about ₹21,000 crore up from an earlier ₹18,000 crore, after receiving strong investor demand, according to people familiar with the matter. The securities are being sold at a coupon of around 7.75%, with Barclays acting as the sole arranger to the transaction. Investors likely to participate include mutual funds like ICICI Prudential Mutual Fund and other domestic asset managers.

The deal, which will close this Friday, is backed by receivables from Reliance's operating businesses and is expected to be one of the largest securitisation transactions. The notes carry a tenor of about four years, making them attractive to mutual funds seeking shorter-duration paper, sources said. The financing will be structured as asset-backed securitisation with securities issued by a trust and supported by a pool of loans linked to RIL's businesses.

"The entire stock is expected to be absorbed by five to six large investors, led by ICICI Prudential Mutual Fund with a commitment of about ₹6,000 crore, alongside SBI Mutual Fund, HDFC Mutual Fund and others," sources said. "Barclays is also expected to take up a share of it."


Spokespersons of Reliance, Barclays, ICICI Prudential and HDFC Mutual Fund did not respond to request for comment.

Reliance had initially targeted ₹18,000 crore and is looking to raise ₹21,000 crore given higher demand as Bloomberg had previously reported that the company is planning to raise about ₹18,000 crore through asset-backed securities.

The company is also exploring other fundraising avenues, including offshore loans such as a yen-denominated facility, as part of efforts to diversify its funding sources. The securitisation route allows Reliance to monetise its cash flows.

"After a period of negative flows, fixed-income inflows have picked up recently, particularly at the shorter end of the curve, reviving appetite and making yields such as 7.75% for four years look attractive," said a mutual fund executive. Earlier this year, Reliance Industries had raised a $2.9 billion dual-currency offshore loan, which had drawn participation from 55 banks, the biggest syndicate for an Asian loan this year.