Reliance Industries to raise $ 750 mn overseas

For a second time in less than two weeks, Reliance Industries Ltd (RIL) is planning to hit the overseas debt market. The company today announced that it will raise $ 750 mn through unsecured notes due 2045. The Notes have been priced at 262.5 basis points over the 30-year US Treasury Note, at a price of 98.865 to yield 4.948%.

The Notes will bear fixed interest of 4.875% p.a. with interest payable semi-annually in arrears and shall rank pari passu with all other unsecured and unsbordinated obligations of the company. The funds will be utilised for its ongoing capital expenditure, RIL said.

The Notes were over 3.07 times over-subscribed across 167 accounts.

On January 22, the company had raised $1 billion by selling 10-year bonds at an interest rate of 4.125 per cent, the lowest in Asia and with almost no new-issue premium.

The lead arrangers to the issue are Barclays, Bank of America Merrill Lynch, HSBC and Citi, among others.

The issue has been rated Baa2 by Moody’s Investors Service with a stable rating and the proceeds from the issue will be used to fund the company’s capital expenditure of Rs 1.8 trillion over the next few years. The company’s scrip closed at Rs 937.45, up 3.25 per cent on the BSE on Tuesday.

The rating also accommodates Moody’s expectation that RIL will use its financial flexibility to make growth-enhancing investments that will boost its business and geographical diversification.

"RIL's Baa2 rating reflects its leading market position, globally competitive refining business which has consistently commanded higher margins than its competitors, and vertically-integrated operations across the hydrocarbon chain. The rating also recognises RIL's moderate financial leverage, strong operating cash flow and excellent liquidity," said Vikas Halan, Moody's, vice-president and senior credit officer.

"Over the next 12 months, we expect RIL's credit metrics to remain stable, supported by strong earnings contributions from its refining and petrochemical segments even as the company increases its borrowings to partially fund its large INR1.8 trillion capex plan. Moreover, we anticipate RIL's credit profile will improve upon completion of the planned capex as the refining segment projects will enhance its refining margin by about $2.0 - $2.5 per barrel," added Halan.

As of December 31, 2014, RIL had cash and cash equivalents of Rs 787 billion compared to a total debt of Rs 1.5 trillion.

In 2014, the company had raised over $3.3 billion in forex debt.