Mumbai: Reliance Industries Ltd (RIL) said on Tuesday that it had raised $800 million by selling 10-year bonds overseas at the lowest coupon rate for an Indian corporate bond sale of that maturity. RIL, will use the proceeds to refinance existing debt, it said in a statement.
The bond sale came after Moody’s Investors Service on Friday raised India’s sovereign bond rating by one notch to Baa2 for the first time in 14 years. The bonds were priced at 3.66%.
“We are delighted to have issued 10-year bonds at the lowest coupon ever for an Indian corporate. 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,” said V.Srikanth, joint chief financial officer, RIL.
The bonds were assigned a ‘BBB+’ rating by Standard & Poor’s and ‘Baa2’ by Moody’s. The notes were 1.6 times subscribed across 90 accounts.
At the end of the September quarter, RIL’s debt had swelled to Rs2.14 trillion from Rs1.96 trillion as of 31 March. Cash in hand was Rs77,014 crore. RIL’s debt has increased because of capital expenditure on its telecom venture.
S&P Global Ratings on Monday said RIL continues to bolster its business profile with new growth projects in its already large, integrated and efficient oil refining and petrochemical businesses.
In a separate note, Moody’s said its Baa2 rating on the bonds reflected the company’s strong ability to generate operating cash flows, with annual earnings before interest, tax, depreciation and amortisation (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.
“Even though RIL’s projects in the refining and petrochemical segments are coming to an end, the cash outflow for capital spending will remain high as payments to creditors for past capital expenditure are made over the next 12-18 months. Such payments along with additional capital spending in the digital services business will constrain any reduction in net borrowings until fiscal 2019 ending March 2019,” Moody’s said.