Mukesh Ambani-led Reliance Industries is looking to raise around Rs 10,000 crore via bonds after the Reserve Bank of India (RBI) last month decided to provide additional liquidity in the system to help borrowers dealing with the economic damage caused by coronavirus pandemic. The oil-to-telecom conglomerate is in talk with banks to raise the amount through bond sale this week.
Earlier this month, the board of RIL approved a proposal to raise up to Rs 25,000 crore through non-convertible debentures (NCDs) in tranches, on a private placement basis. The company is looking at refinancing Rs 10,000 crore worth of non-convertible debentures (NCDs) maturing in this financial year, and a portion of high cost loans with private placement of new NCDs. The move will help the company to reduce the cost of debts, especially in a low interest rate scenario.
RIL is in discussion with Axis Bank, HDFC Bank, ICICI Bank and State Bank of India to avail borrowing at lowest cost. The proposed bonds are likely to have coupon of 7-7.2% per cent with a maturity of three-years.
Until March 2019, RIL had issued secured NCDs of Rs 500 crore and unsecured NCDs of Rs 37,000 crore. Of that, the secured NCDs of Rs 500 crore and Rs 10,000 crore of unsecured NCDs will become mature in FY21. RIL has unsecured term loans worth Rs 47,926 crore maturing between April 2020 and March 2025, a sources in the know told BusinessToday.In. The secured NCDs have an interest rate of nearly nine per cent, while unsecured has around seven per cent. RIL issued NCDs aggregating to Rs 19,000 crore in the Indian capital markets in 2018-19.
RIL is not the only company that is planning to raise funds under the liquidity window offered by the central bank. Mortgage lender Housing Development Finance Corp (HDFC), Power Grid Corp of India, National Housing Bank (NHB) and Housing and Urban Development Corp (Hudco), are also looking to avail loan at cheaper rate.
In a bid to maintain stability in the financial system in the wake of coronavirus outbreak, the Reserve Bank of India (RBI) on March 27 introduced the Targeted Long Term Repo Operations (TLTROs), as a tool to enhance liquidity in the system, especially the corporate bond market. The central bank plans to lend as much as Rs 1 lakh crore under TLTRO to counter the large sell-offs in the domestic equity, bond and forex markets caused by the coronavirus crisis.
By Chitranjan Kumar