RIL raises 4 billion dollars in largest-ever foreign currency bonds issue

Reliance Industries (RIL), the nation’s most valuable company, on Thursday said it has raised $4 billion (around Rs 30,000 cr) in debt through the largest ever foreign currency bond issuance by an Indian entity.

The oil-to-telecom conglomerate plans to use the proceeds of the three tranche issues to retire existing borrowings.

The issue was “nearly 3 times oversubscribed with a peak order book aggregating around $11.5 billion,” the company said in a statement.

This is the largest-ever foreign currency bond transaction in India, eclipsing ONGC Videsh Ltd’s $2.2 billion US dollar bonds issue of 2014.

Reliance raised $1.5 billion in a 10-year issue at a coupon or interest rate of 2.875 per cent, $1.75 billion in a 30-year deal at a 3.625 per cent rate and $750 million in a 40-year issue at a 3.75 per cent coupon rate. This is the first time any BBB-rated Asian company outside of Japan has issued a 40-year dollar bond. The bonds in 10-year, 30-year and 40-year maturities are due to repayment between 2032 and 2062.

Reliance plans to use the proceeds to retire some of the existing debt, including a $1.5 billion loan that is due to mature in February.

The company said the bonds carry coupons (interest rate) linked to US treasuries. The 10-year notes will carry a coupon rate that is 1.2 percentage points above the 10-year US treasury note, the 30-year bond will offer 160 basis points over the corresponding US government bond and the 40-year note will give 170 basis points over the respective US Treasury note.

This, it said, represents the ‘’tightest ever implied credit spread’’ over US Treasury notes by an Indian company.

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

With this, it has joined a select group of issuers from Asia to have made jumbo bond issuances. Reliance said 53 pc of the money was raised from Asia, 14 per cent from Europe and 33 pc in the US.