Reliance Industries Ltd (RIL) is in talks with banks to raise as much as Rs. 100 billion in a bond sale this week, equivalent to about a tenth of the special funding facility provided by the regulator, underscoring the possibility of top-rated and state-run companies picking up most of the amount.
Others accessing the window include Housing Development Finance Corp (HDFC), Power Grid Corp of India, National Housing Bank (NHB) and Housing and Urban Development Corp (Hudco).
The Reserve Bank of India (RBI) is lending as much as Rs. 1000 billion under Targeted Long Term Repo Operations (TLTRO) to lower yields in the secondary market and invest in primary issues. The move was announced on March 27 along with a cut in the policy rate to a record low as part of initiatives to help borrower scope with the economic damage inflicted by the Covid-19 pandemic.
The RBI exempted banks from mark-to-market provisions, making the scheme more attractive.
RIL is finalising details of the plan with Axis Bank, HDFC Bank, ICICI Bank and State Bank of India that could potentially feature the lowest cost of borrowing in years, said people familiar with the discussions. The proposed bonds will likely offer 7-7.2% percent with a three-year maturity, they said, adding that SBI Caps is also involved in negotiations.
To be sure, the banks’ total subscription to the RIL bond sale need not necessarily be entirely from the TLTRO funds.