Reliance Industries (RIL) plans to raise at least $500 million (about R2,700 crore) through an issue of dollar-denominated perpetual bonds with the book expected to open on Monday.
RIL is considering pricing the paper, which can be bought back by it after five years, at about 6%, according to bankers familiar with the deal. The reference point for pricing the bond could be the current yield on the recent 30-year bond issued by the company, bankers said, adding that buyers would also take into account the liquidity of the paper. In the past RIL has issued 50-year and 100-year bonds.
“The company is raising at least $500 million and the final amount will be decided depending on market conditions,” a company spokesperson said. S&P has rated the bonds BBB, while Moody's Investors Service has assigned a Baa2 rating. A perpetual bond does not have a maturity and the coupon is paid forever. The issuer does not have to redeem the bonds.
RIL, which is sitting on about R75,000 crore of surplus cash, has raised about $4 billion from the overseas market in FY 2012-13.
RIL is the fifth company to raise funds from the overseas market in 2013, at a time when Indian banks have been able to raise funds at attractive spreads. Recently, Exim Bank mopped up $750 million through 10-year dollar bonds at 220 basis points over the US treasury.
Power Grid raised $500 million at 210 basis points over the US treasury.
The country’s second largest lender, ICICI Bank, raised SGD225 million (US$202 million) through a 7-year Singapore dollar-denominated bond.
The bank had given a price guidance of 4%, while the final pricing saw tightening of 0.35% to 3.65%. Tata Communications was the first Indian company to successfully sell a unrated issue in the Singapore market and raised SDG250 million at 4.25%, amid a record order book of SGD3.5 billion.
Investment bankers said overseas investors have appetite for Indian paper and more private and public companies could raise funds through this route.