Reliance Industries 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 per cent, the lowest coupon ever achieved by an Indian corporate for a 10-year issuance, the company said in a statement today.
RIL, which is rated the same as the sovereign, will use the proceeds to refinance the existing debt. This was the first dollar note 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 US Treasury Note, at a price of 100 to yield at 3.667 per cent,” the statement said.
They will bear a fixed interest of 3.66 per cent per annum, with interest payable semi-annually in arrears and shall rank pari passu with all other unsecured and unsubordinated obligations of the company. This, RIL said, was the tightest ever spread over US Treasury for an Indian entity for a 10-year issuance.
Also, it was the tightest ever spread over US Treasury for a 10-year BBB corporate issuance from Asia ex-Japan since the global financial crisis. “The company will use the proceeds to redeem its existing $800 million 5.875 per cent senior perpetual fixed rate unsecured notes pursuant to the terms of such notes,” it said. The notes were over 1.6 times oversubscribed across 90 accounts.
V Srikanth, Joint Chief Financial Officer, and RIL, said: “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.” 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. “We are delighted to have issued 10-year bonds at the lowest coupon ever for an Indian corporate.”
Once a net zero-debt company, RIL has borrowed heavily to fund its mega 4G telecom rollout. The company’s debt swelled to Rs. 2141.45 billion at the end of September compared with Rs. 1966.01 billion as on March 31, 2017. Cash in hand was marginally lower at Rs. 770.14 billion. Assigning its ‘BBB+’ rating for the bonds issue, S&P Global Ratings had yesterday 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,” it 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. 700 billion in the current fiscal and Rs.900 billion in 2018-19. Ebitda was Rs. 325 billion 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 annual Ebidta exceeding $10 billion from its large-scale integrated refining and petrochemical operations — which generate strong margins — and the company’s nascent but growing digital services business.
RIL gains after company hits debt market with $800-mn issue
Reliance Industries gained over 2% on Tuesday and was the top index gainer after the company hit the overseas debt market with a $800-million bond sale programne as it seeks to pare a portion of its high cost debt that stands at over Rs 2140 billion. The stock rose as much as 2.26% to Rs 939 on the BSE. The development came after Moody’s upgraded India’s sovereign rating last week from the lowest investment grade Baa3 to a notch higher at Baa2. Meanwhile, rating agency Moody's on Monday signed a Baa2 rating to the proposed unsecured bond sale by RIL, reported