Reliance Industries Ltd. said it has raised $800 million by selling 10-year bonds - the first offering since Moody's raised India's sovereign rating.
The bonds were priced at 3.66 percent, the lowest coupon ever achieved by an Indian corporate for a 10-year issuance, the company said in a statement.
RIL, which is rated the same as the sovereign bond, will use the proceeds to refinance existing debt. This was the first dollar note issuance this year. The note by RIL, India's largest company, was assigned ‘BBB+' rating by S&P and ‘Baa2' by Moody's Investors Service.
The notes have been priced at 130 basis points over the 10-year U.S. Treasury Note, at a price of 100 to yield at 3.667 percent.RIL statement.
They will bear fixed interest of 3.66 percent per annum, with interest payable semi-annually in arrears and shall rank on an equal footing with all other unsecured and unsubordinated debt obligations of the company.
This was the tightest ever spread over U.S. Treasury for an Indian entity for a 10-year issuance, according to RIL. It is also the tightest ever spread over U.S. Treasury for a 10-year BBB corporate issuance from Asia ex-Japan since the global financial crisis in 2008.
The company will use the proceeds to redeem its existing $800 million 5.875 percent senior perpetual fixed rate unsecured notes pursuant to the terms of such notes.Reliance Industries Ltd.
The notes were subscribed over 1.6 times across 90 accounts.
"This refinancing transaction was well received by high quality investors across asset managers, insurance companies and banks and helped us achieve substantial savings in interest cost over the life of the notes," V Srikanth, Joint Chief Financial Officer, RIL, said.
Issued against the backdrop of the upgrade of the country ratings by Moody's, RIL successfully concluded a swift intra-day execution to capitalise on the market window, he said.
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Once a net zero-debt company, RIL has borrowed heavily to fund its mega 4G telecom rollout as Reliance Jio. The company's debt swelled to Rs 2.14 lakh crore at the end of September as compared to Rs 1.96 lakh crore as in March. Cash in hand was marginally lower at Rs 77,014 crore.
S&P Global Ratings had stated that RIL continues to bolster its business profile with new growth projects in its already large, integrated and efficient oil refining and petrochemical businesses.
“The completion of recent investments in the refining and petrochemical segment will further add to the company's cash flows,” S&P said, adding that RIL's diverse businesses with high levels of integration help offset the cyclicality inherent in the oil and gas, and petrochemicals industries.
S&P said RIL is on track to achieve Ebitda of about Rs 70,000 crore in the current fiscal and Rs 90,000 crore in 2018-19. Ebitda was Rs 32,500 crore for the first half of the current fiscal.
Moody's Investors Service had separately stated that RIL's Baa2 rating reflects the company's strong ability to generate operating cash flows, with its annual operating income exceeding $10 billion from large-scale integrated refining and petrochemical operations.
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