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The oil-to-telecom conglomerate plans to use the proceeds of the three tranche issues to retire existing borrowings.
The issue was ”nearly 3 times oversubscribed with a peak order book aggregating around USD 11.5 billion,” the company said in a statement.
This is the largest ever foreign currency bond transaction in India, eclipsing ONGC Videsh Ltd’s USD 2.2 billion US dollar bonds issue of 2014.
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This is the first time any BBB-rated Asian company outside of Japan has issued a 40-year dollar bond.
The bonds in 10-year, 30-year and 40-year maturities are due to repayment between 2032 and 2062.
Reliance plans to use the proceeds to retire some of the existing debt, including a USD 1.5 billion loan that is due to mature in February.
The company said the bonds carry coupons (interest rate) linked to US treasuries. The 10-year notes will carry a coupon rate that is 1.2 percentage points above the 10-year US treasury note, the 30-year bond will offer 160 basis points over the corresponding US government bond and the 40-year note will give 170 basis points over the respective US Treasury note.
This, it said, represents the ”tightest ever implied credit spread” over US Treasury notes by an Indian company.
The Notes are rated BBB+ by S&P and Baa2 by Moody’s.
Stating that with this, it has joined a select group of issuers from Asia to have made jumbo bond issuances, Reliance said 53 per cent of the money was raised from Asia, 14 per cent from Europe and 33 per cent in the United States.
In terms of investor profile, 69 per cent went to fund managers, 24 per cent to insurance companies, 5 per cent to banks and 2 per cent to public institutions.
”This transaction is significant on various counts – (it is) the largest-ever foreign currency bond issuance from India, tightest ever implied credit spread over the respective US Treasury across each of the 3 tranches by an Indian Corporate, lowest coupon achieved for benchmark 30-year and 40-year issuances by a private sector BBB+ corporate from Asia ex-Japan, and first-ever 40-year tranche by a BBB+ private sector corporate from Asia ex-Japan,” the statement said.
Reliance is a net-zero debt firm with its cash balance of Rs 2.59 lakh crore, exceeding its gross debt of Rs 2.55 lakh crore as of September 30, 2021.
Its existing cash, along with expected cash flows from operations, will be sufficient to cover its cash outflows for capital spending and debt maturities in the next 18 months, Moody’s Investors Service had said earlier this week.
In November 2021, it received around Rs 26,600 crore in proceeds from the final call on its rights issue, which further enhanced its liquidity.
Reliance said interest on the Notes will be payable semi-annually in arrears, and the Notes shall rank pari passu with all other unsecured and unsubordinated obligations of the firm. The bond proceeds will be primarily used for refinancing existing borrowings.
Srikanth Venkatachari, Joint Chief Financial Officer of RIL, commented, ”We are extremely pleased with the strong outcome on our multi-tranche long-dated USD bond issuance, having issued not only the largest debt capital market transaction at USD 4 billion but also the tightest credit spreads across each of the long-dated tenors for any corporate in India”.
”The support received from the marquee international capital market investors is reflective of the strength of our underlying businesses with established growth platforms across energy, consumer and technology as well as the robustness of our balance sheet. This issue continues the tradition of Reliance being a sophisticated and innovative issuer across the capital structure.” BofA Securities, Citigroup, and HSBC acted as Joint Global Coordinators.
BofA Securities, Citigroup, HSBC, Barclays, JP Morgan and MUFG acted as Joint Active Bookrunners. ANZ, BNP PARIBAS, Credit Agricole CIB, DBS Bank Ltd., Mizuho Securities, SMBC Nikko, Standard Chartered Bank and State Bank of India, London Branch acted as Joint Passive Bookrunners.