Reliance to raise ₹12,500cr via bonds
What's the story
Reliance Industries Limited (RIL), led by billionaire Mukesh Ambani, is planning to raise up to ₹12,500 crore ($1.3 billion) through local-currency bonds. The move comes as the company's first offering since November 2023 and is expected to be the largest listed deal in the market this year. The funds will be raised through AAA-rated notes with a five-year maturity and a coupon rate of 7.47%.
Market impact
Bond sale may revive local debt market
The bond sale is expected to give a much-needed push to the local debt market, which has been sluggish this year.
This is because companies have been relying on bank loans for their financing needs amid lower borrowing rates.
Other Indian firms are also looking at bond sales, anticipating that the Reserve Bank of India may tighten its monetary policy later this year due to rising inflation risks.
Industry response
Reliance's bond issue will set a benchmark for top-rated issuers
Ajay Manglunia, Executive Director at Capri Global Capital said, "Reliance rupee bond issue will set a benchmark for top-rated issuers." He added that fund houses "will rush to grab a piece of debt."
The bond sale also coincides with Jio Platforms Ltd.'s potential $4 billion IPO later this year.
Borrowing trends
Decline in domestic bond sales this year
So far this year, Indian companies have borrowed ₹8.9 trillion through domestic bonds, an 11% decline from last year.
The yield on top-rated three-year company notes has increased by 70 basis points in the last one year.
In contrast, the weighted average rate on new rupee loans sanctioned by banks has decreased by 29 basis points in the last one year till July, according to data from Bloomberg and RBI.