Reliance raises $4 bn in India's largest-ever foreign currency bonds issue

'The issue was nearly 3 times oversubscribed with a peak order book aggregating $11.5 bn and was priced through RIL's secondary curve,' a company statement said

Reliance Industries Ltd, the nation's most valuable company, on Thursday said it has raised USD 4 billion debt in the largest ever foreign currency bonds issuance from India.

The oil-to-telecom conglomerate raised the money in foreign currency denominated bonds and plans to use the proceeds to retire existing borrowings.

The issue was "nearly 3 times oversubscribed with a peak order book aggregating USD 11.5 billion and was priced through RIL's secondary curve," a company statement said.

The firm raised USD 1.5 billion at a coupon rate of 2.875 per cent, USD 1.75 billion at 3.625 per cent and USD 750 million at 3.75 per cent. The notes are due to repayment between 2032 and 2062.

"The Notes have been priced at 120 basis points, 160 basis points and 170 basis points over the respective US Treasuries benchmark," it said.

The Notes are rated BBB+ by S&P and Baa2 by Moody's.

With this, Reliance has joined a select group of issuers from Asia to have made jumbo bond issuances.

"This transaction is significant on various counts - (it is) largest-ever foreign currency bond issuance from India, tightest ever implied credit spread over the respective US Treasury across each of the 3 tranches by an Indian Corporate, lowest coupon achieved for benchmark 30-year and 40-year issuances by a private sector BBB corporate from Asia ex-Japan, and first-ever 40-year tranche by a BBB private sector corporate from Asia ex-Japan," the statement said.

Reliance is a net-zero debt firm with its cash balance of Rs 2.59 lakh crore, exceeding its gross debt of Rs 2.55 lakh crore as of September 30, 2021.

Its existing cash, along with expected cash flows from operations, will be sufficient to cover its cash outflows for capital spending and debt maturities in the next 18 months, Moody's Investors Service had said earlier this week.

In November 2021, it received around Rs 26,600 crore in proceeds from the final call on its rights issue, which further enhanced its liquidity.

Reliance said interest on the Notes will be payable semi-annually in arrears, and the Notes shall rank pari passu with all other unsecured and unsubordinated obligations of the firm. The bond proceeds will be primarily used for refinancing existing borrowings.

The Notes received orders from over 200 accounts in Asia, Europe and the United States.

In terms of geographic distribution, the Notes were distributed: 53 per cent in Asia, 14 per cent in Europe and 33 per cent in the United States.

The Notes were distributed to high-quality fixed income accounts: 69 per cent to fund managers, 24 per cent to insurance companies, 5 per cent to banks and 2 per cent to public institutions.

Srikanth Venkatachari, Joint Chief Financial Officer of RIL, commented, "We are extremely pleased with the strong outcome on our multi-tranche long-dated USD bond issuance, having issued not only the largest debt capital market transaction at USD 4 billion but also the tightest credit spreads across each of the long-dated tenors for any corporate in India".

"The support received from the marquee international capital market investors is reflective of the strength of our underlying businesses with established growth platforms across energy, consumer and technology as well as the robustness of our balance sheet. This issue continues the tradition of Reliance being a sophisticated and innovative issuer across the capital structure."

BofA Securities, Citigroup, and HSBC acted as Joint Global Coordinators.

BofA Securities, Citigroup, HSBC, Barclays, JP Morgan and MUFG acted as Joint Active Bookrunners.

ANZ, BNP PARIBAS, Credit Agricole CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard Chartered Bank and State Bank of India, London Branch acted as Joint Passive Bookrunners.