Reliance Industries raises $800 million in 3.667% overseas bond

Reliance Industries Limited (RIL) on Monday said it has raised $800 million in senior unsecured bonds with a coupon rate of 3.667 per cent, maturing in 2027, the lowest coupon for a 10-year bond issued by an Indian entity.

The bonds have been assigned a rating of BBB+ by Standard and Poor's and Baa2 by Moody's, RIL stated in a release.

RIL proposes to use the proceeds of the issue to redeem its existing $800 million 5.875 per cent senior perpetual fixed rate unsecured notes.

The bonds have been priced at 130 basis points over the 10-year US Treasury notes - the tightest ever spread over US Treasury for a 10 year BBB corporate issuance from Asia ex-Japan since the global financial crisis, according to RIL.

The notes will be denominated in US dollars, and will bear fixed interest of 3.667 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.

RIL proposes to 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.

The notes were over 1.6 times over-subscribed across 90 accounts.

In terms of geographic distribution, the notes were distributed 62 per cent in Asia, 13 per cent in Europe and 25 per cent in the United States.

In terms of investor distribution, the notes were distributed to high quality fixed income accounts – 57 per cent to fund managers, 26 per cent to insurance companies and pension funds, 11 per cent to banks and 6 per cent to public sector.

''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, we successfully concluded a swift intraday execution to capitalise on the market window. We are delighted to have issued 10 year bonds at the lowest coupon ever for an Indian corporate,'' V Srikanth, joint chief financial officer of RIL, commented.

BofA Merrill Lynch, Citigroup and HSBC acted as joint global coordinators. Barclays, J P Morgan and Standard Chartered Bank acted as Active Joint Bookrunners. ANZ, BNP PARIBAS, Crédit Agricole CIB, DBS Bank Ltd, Deutsche Bank, Mizuho Securities, Morgan Stanley, Scotiabank, SMBC Nikko and Société Générale Corporate & Investment Banking acted as Passive Bookrunners.

S&P said RIL is on track to achieve EBITDA of about Rs70,000 crore in the current fiscal and Rs90,000 crore in 2018-19. EBITDA was Rs32,500 crore for the first half of the current fiscal.

Moody's Investor Services had separately stated that RIL's Baa2 rating reflects the company's strong ability to generate operating cash flows, with annual EBITDA 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.