RIL dollar bonds oversubscribed by 4.5 times

Reliance Industries (RIL) kicked off this year’s first benchmark issue of bonds on Thursday by raising $1 billion through a dollar bond issue. The funds would be used for its ongoing capital expenditure, RIL said in a statement.

Despite its rich cash pile (Rs 78,691 crore as of December 2014), RIL prefers to raise debt to finance its ventures. Its cash pile, however, is down from Rs 83,456 crore in December 2013. Between December 2013 and December 2014, RIL’s debt rose from Rs 1,42,084 crore to Rs 1,50,007 crore.

RIL plans to invest about Rs 1.8 lakh crore in capex over the next three years. A sizeable share of this investment will be towards the launch of its telecom venture under the brand name Reliance Jio.

On the bond issue, V Srikanth, joint chief financial officer, RIL, said: “This transaction opened up the market for the private sector corporate issuances out of Asia, against the backdrop of challenging market conditions. We are happy to see participation from repeat investors being supplemented by new high-quality investors including central banks and real money accounts.”

“The notes have been priced at 240 basis points over the 10-year ‘US Treasury Note’, at a price of $98.998 to yield 4.249 per cent,” the statement added. The notes will be denominated in dollars, and will bear a fixed interest of 4.125 per cent per annum, with interest payable semi-annually in arrears and shall rank with all other unsecured and unsubordinated obligations of the company.

Rating agency Moody’s has assigned Baa2 rating to the proposed bonds. The notes were over-subscribed 4.5 times across 272 accounts.

In terms of geographic distribution, the Notes were distributed 31 per cent in Asia, 25 per cent in Europe, and 44 per cent in the US. In terms of investor distribution, the notes were distributed to high quality fixed income accounts: 62 per cent to fund managers, seven per cent to sovereign wealth funds, 18 per cent to insurance companies and pension funds and 13 per cent to banks.

Reliance Industries Limited (RIL)