Mukesh Ambani’s Reliance Industries mulls Rs 15,000 crore bond sale: Report
If this transaction of Rs 15,000 crore ($1.8 billion) comes to fruition, it would mark the largest-ever rupee bond sale for Reliance Industries.
- Nov 2, 2023,
- Updated Nov 2, 2023 11:16 AM IST
Reliance Industries is reportedly considering a monumental local-currency bond sale, aiming to raise Rs 15,000 crore ($1.8 billion). A Bloomberg report citing undisclosed sources suggested that such a rupee bond sale would be the biggest-ever for Reliance Industries. It would also be the conglomerate's first foray into the domestic bond market since 2020, as per the report.
Reliance Industries is a diversified conglomerate with interest in oil & gas, telecom and retail sectors. The Mukesh Ambani-led company has been on an expansion spree, rapidly venturing into 5G technology and emerging sectors like green energy and financial services.
The strategic diversification into consumer-facing businesses has necessitated this fresh round of fundraising for Reliance Industries. This year, the company's retail arm brought strategic investors such as Qatar Investment Authority and KKR & Co to the business.
The most-valued stock on Dalal Street, Reliance Industries commands a AAA credit rating from Crisil Ratings. This rating surpasses that of Tata Motors Ltd.'s AA rating, a ta compiled by Bloomberg suggested.
However, a discrepancy emerges when assessing Reliance's creditworthiness from other perspectives. Moody's and Fitch, for instance, have assigned Baa2 and BBB ratings respectively to Reliance Industries, placing it at the lower end of the investment-grade spectrum.
What are local currency bonds?
Local currency bonds, also known as domestic currency bonds, are debt securities issued and denominated in the local currency of a particular country. These bonds are typically issued by governments, corporations, or other entities within their own country, and the principal and interest payments are made in the local currency.
Local-currency bonds are distinct from foreign-currency bonds, where the bond's denomination is in a foreign currency, and the principal and interest payments are made in that foreign currency. For example, a US company issuing bonds denominated in Japanese yen would be issuing foreign-currency bonds in Japan.
The choice between issuing local and foreign currency bonds depends on various factors, including the issuer's funding needs, the currency in which they operate, and their assessment of foreign exchange risk. Local-currency bonds can be more attractive to issuers who want to match their liabilities with their revenue streams, as they avoid exposure to currency exchange rate fluctuations. However, they may have a smaller international investor base compared to foreign-currency bonds.
Investors in local-currency bonds are exposed to the credit risk of the issuer, as well as the interest rate risk associated with changes in domestic interest rates. These bonds are an essential component of a country's debt market and can play a crucial role in the country's financial system and economic development.
Also Read SBI Card partners with Reliance Retail to launch 'Reliance SBI Card'
Reliance Industries is reportedly considering a monumental local-currency bond sale, aiming to raise Rs 15,000 crore ($1.8 billion). A Bloomberg report citing undisclosed sources suggested that such a rupee bond sale would be the biggest-ever for Reliance Industries. It would also be the conglomerate's first foray into the domestic bond market since 2020, as per the report.
Reliance Industries is a diversified conglomerate with interest in oil & gas, telecom and retail sectors. The Mukesh Ambani-led company has been on an expansion spree, rapidly venturing into 5G technology and emerging sectors like green energy and financial services.
The strategic diversification into consumer-facing businesses has necessitated this fresh round of fundraising for Reliance Industries. This year, the company's retail arm brought strategic investors such as Qatar Investment Authority and KKR & Co to the business.
The most-valued stock on Dalal Street, Reliance Industries commands a AAA credit rating from Crisil Ratings. This rating surpasses that of Tata Motors Ltd.'s AA rating, a ta compiled by Bloomberg suggested.
However, a discrepancy emerges when assessing Reliance's creditworthiness from other perspectives. Moody's and Fitch, for instance, have assigned Baa2 and BBB ratings respectively to Reliance Industries, placing it at the lower end of the investment-grade spectrum.
What are local currency bonds?
Local currency bonds, also known as domestic currency bonds, are debt securities issued and denominated in the local currency of a particular country. These bonds are typically issued by governments, corporations, or other entities within their own country, and the principal and interest payments are made in the local currency.
Local-currency bonds are distinct from foreign-currency bonds, where the bond's denomination is in a foreign currency, and the principal and interest payments are made in that foreign currency. For example, a US company issuing bonds denominated in Japanese yen would be issuing foreign-currency bonds in Japan.
The choice between issuing local and foreign currency bonds depends on various factors, including the issuer's funding needs, the currency in which they operate, and their assessment of foreign exchange risk. Local-currency bonds can be more attractive to issuers who want to match their liabilities with their revenue streams, as they avoid exposure to currency exchange rate fluctuations. However, they may have a smaller international investor base compared to foreign-currency bonds.
Investors in local-currency bonds are exposed to the credit risk of the issuer, as well as the interest rate risk associated with changes in domestic interest rates. These bonds are an essential component of a country's debt market and can play a crucial role in the country's financial system and economic development.
Also Read SBI Card partners with Reliance Retail to launch 'Reliance SBI Card'