In a mega-bond issue, Reliance Industries Ltd. plans to raise up to Rs 20,000 crore through domestic rupee-denominated bonds maturing in 10 years, according to RIL's issue document seen by BQ Prime.
This could potentially be the largest-ever bond issue by a private manufacturing company if the Indian billionaire Mukesh Ambani-backed company raises the entire amount.
The maturity date of this bond is Nov. 10, 2033, and will be redeemed in a phased manner the same year.
The partly paid bonds will open for sale on Thursday, the document said. The fundraising amount includes the base issue of Rs 10,000 crore, with an alternative to retain the green shoe option up to Rs 10,000 crore. The company intends to issue 20 lakh debentures at the face value of Rs 1 lakh per debenture.
A partly paid bond is bought using installment payments, unlike standard bonds, where the investor pays the full amount at the face value.
The entire net proceeds of the debenture issue will be utilised for refinancing existing borrowings maturing this year. The other way to deploy these funds would be towards ongoing capital expenditure requirements, investments, or lending to domestic subsidiaries where RIL holds a majority stake.
Up to 25% of the net proceeds could also be used for "any other purpose in the ordinary course of business".
The bonds are rated 'AAA' by CareEdge Ratings and CRISIL Ratings, and will be allotted on Friday.
RIL's last bond issuance was in April 2020, when it raised Rs 2,795 crore through bonds maturing in five years at a coupon rate of 7.40%.
In February, HDFC Ltd. had raised Rs 25,000 crore through a sale of 10-year non-convertible debentures, marking the largest domestic rupee bond issuance in India.
The fundraising by Reliance comes at a time when systemic liquidity in the banking system is in deficit, and market participants expect the reversal in the Reserve Bank of India's policy rates to happen later than expected. This makes it difficult for corporates to raise money through banks, according to Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.
"Several companies are looking to tap corporate bond market this month... yield through corporate bonds is more competitive than MCLR," Srinivasan told BQ Prime. He expects the coupon on RIL's 10-year bonds in the range of 7.70-7.80%.
In recent years, the RBI has taken measures to strengthen the country's corporate bond market for those who want to secure funding for long-term requirements.
"Corporate bonds can lower the cost of long-term funding. Banks are typically constrained in lending long-term because their liabilities are relatively of a shorter tenor," T Rabi Sankar, deputy governor of RBI had said in August 2022.
Mega Bond Issue: Reliance Industries Plans To Raise Rs 20000 Crore Via NCDs - BQ Prime
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