Mumbai: Reliance Industries (RIL), India’s largest corporate by revenues, has raised $3 billion from 11 banks in what is the largest such deal by the company in almost two years.
The five-year loan was priced at 120 basis points over the threemonth secured overnight financing rate (SOFR) last month. It includes $450 million denominated in Japanese yen as the oil-to-telecom conglomerate looks to shore up its funds ahead of repayments coming up this year, two people familiar with the deal said.
“The company has already drawn down about $700 million of the amount lent by these banks and plans to tap more as its requirements come up, mostly in the current quarter,” said a person aware of details.
RIL did not immediately reply to an email seeking comment.
The three-month SOFR rate was around 4.80% mid-December; at 120 basis points above the benchmark rate, the five-year loan was priced at around 6%. One basis point is 0.01 percentage point. ET could not ascertain the exact interest rate on the loan.
“Of this $3 billion, about $450 million is denominated in yen and priced at 75 basis points above the three-month benchmark in Japan,” said the person.
“This dual currency loan deal was signed and executed last month,” said one of the people cited above. The yen part of the loan deal was priced at the threemonth Tokyo Interbank Offer Rate (Tibor), the benchmark rate in Japan.
“Almost all of the money raised will be used to refinance loans which are maturing in 2025. More banks may join the syndication of the loan later this quarter,” said one of the persons cited.
Bloomberg data show that RIL has repayments worth about $2.9 billion, including interest payments, due in 2025.
The news agency on December 10 reported that RIL is seeking $3 billion in loans from banks.
A document seen by ET confirmed that 11 banks have committed about $3 billion to RIL. Bank of America has the largest share at $343 million, followed by DBS Bank and HSBC ($300 million each) and Japan’s MUFG ($280 million).
State Bank of India is the only Indian lender in the group with a $275 million exposure while Standard Chartered, Mizuho Bank and SMBC from Japan have taken a $250 million exposure each. First Abu Dhabi Bank, Citibank and France’s Credit Agricole CIB have each taken a $241 million exposure, the document showed.
The banks could not be immediately reached for comment.
All these primary lenders are likely to syndicate this loan further before the end of the fiscal year ending March, to dilute their risk and create space to lend more to RIL, which is India’s highest rated company.
The latest loan is similar to the dual currency dollar-yen funds RIL had raised from as many as 15 global banks in the quarter ended December 2022. That loan received a strong response from banks after two rounds of syndication, allowing RIL to retain $2 billion over and above the $3 billion it had raised in the initial round after seeking Reserve Bank of India’s permission, in what was one of the country’s largest syndicated loan facilities.
RIL is India’s best rated corporate, with S&P assigning it BBB+ with a stable outlook because of its strong earnings, which keeps leverage in check. The company is rated higher than India’s BBB- sovereign credit rating.
