Reliance Industries raises $3 bn from 11 banks in dual-currency loan deal

The five-year loan was finalised last month at 120 basis points above the three-month Secured Overnight Financing Rate (SOFR), with $450 million denominated in Japanese yen

Reliance Industries Limited (RIL), India's largest corporation by revenue, has raised $3 billion from a consortium of 11 banks, marking its largest borrowing deal in nearly two years, according to a report by The Economic Times.

 

This five-year loan was finalised last month at 120 basis points above the three-month Secured Overnight Financing Rate (SOFR), with $450 million denominated in Japanese yen, the report said.

 

The oil-to-telecom giant is preparing for significant loan repayments scheduled for 2025. The report quoted a source as saying that the company has already used $700 million from the loan and plans to access more funds in the current quarter as required.

 

 

Loan pricing and terms

 

The three-month SOFR rate stood at approximately 4.80 per cent in mid-December. With an additional 120 basis points, the dollar-denominated loan is priced at around 6 per cent. The yen-denominated portion of the loan is priced at 75 basis points above the three-month Tokyo Interbank Offer Rate (TIBOR), the Japanese benchmark rate.

 

The report quoted a source as saying that this dual-currency loan agreement, encompassing both US dollars and Japanese yen, was executed last month.

 

The $3 billion loan is primarily intended to refinance existing loans maturing in 2025. More banks are expected to join the syndication later this quarter, which would allow the lenders to manage risks better and expand their capacity to lend further to RIL, one of India's most creditworthy companies, the report said.

 

Bloomberg data shows that RIL has around $2.9 billion, including interest payments, due in 2025. The company had sought this loan to enhance its financial flexibility.

 

Key banking partners in the deal

 

According to a document, Bank of America holds the largest share of the loan at $343 million. Other key participants include DBS Bank and HSBC ($300 million each), Japan’s MUFG ($280 million), and India’s State Bank of India ($275 million). Japanese lenders Standard Chartered, Mizuho Bank, and SMBC each have a $250 million exposure. First Abu Dhabi Bank, Citibank, and Credit Agricole CIB have each contributed $241 million, the report said.

 

This recent deal is similar to a dual-currency dollar-yen loan RIL raised in late 2022, which attracted significant interest from global banks. That earlier loan eventually expanded to $5 billion, surpassing the initial $3 billion target after receiving approval from the Reserve Bank of India.

 

Reliance Industries is India's highest-rated corporate borrower. It holds a BBB+ credit rating with a stable outlook from S&P, which is higher than India's BBB- sovereign rating.