Moody's assigns Baa2 rating to proposed RIL USD bonds
Premium- Mukesh Ambani-led Reliance Industries plans to raise around $5 billion in foreign currency-denominated bonds.
Ratings agency Moody's Investors Service on Tuesday assigned a Baa2 rating to the proposed USD-denominated senior unsecured bonds to be issued by Reliance Industries Limited (RIL). The outlook on the rating is stable.
Mukesh Ambani-led RIL plans to raise around $5 billion in foreign currency-denominated bonds. The company will use the bond proceeds for refinancing.
"RIL's Baa2 ratings reflect the company's large scale and dominant market position across its diverse businesses, its management's strong execution track record and our expectation that its credit metrics will remain strongly positioned for its Baa2 rating, despite its planned investments in clean energy and other business segments," said Sweta Patodia, a Moody's Analyst.
"RIL's high dependence on the Indian economy through its digital services and retail businesses constrains its rating to one notch above that of the Indian sovereign rating," adds Patodia, who is also Moody's lead analyst for RIL.
Ratings Rationale
RIL benefits from diversified earnings sources that have little or no correlation, given its presence in the refining and petrochemicals, digital services, and consumer retail segments, Moody's said, adding that these three segments together generated around ₹94,400 crore ($12.6 billion) or 86% of RIL's consolidated EBITDA for the 12 months ended 30 September 2021.
"The company's digital services and consumer retail businesses are housed under separate subsidiaries, while its refining and the petrochemical business -- also known as the oil-to-chemical (O2C) segment -- is held at the holding company level," Moody's added.
The stable outlook, Moody's said, reflects its expectation that the company's earnings will continue to improve over the next 12-18 months across all its business segments, such that its credit metrics will remain strongly positioned for its ratings.
MINT PREMIUM See All
The stable outlook is also in line with the stable outlook of the Indian sovereign rating and reflects Moody's view that RIL cannot be rated more than one notch above the Indian sovereign.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!