Reliance Industries Ltd., (RIL) raised $ 800 million by selling 10 year bonds priced at 3.66%. This was the first offering by an Indian corporate since Moody’s Investor Services raised India’s sovereign rating. Currently, Reliance Industries is also rated on par with the sovereign rating.
In an official statement, the company said the price of the bonds was the lowest coupon ever achieved by a corporate for a 10 year issuance. “The notes have been priced at 130 basis points over the 10 year US Treasury Note, at a price of 100 to yield at 3.667%,” the statement further added. RIL will use the capital to refinance existing debt.
Post this announcement, the company advanced over 2% in trade, followed by a 1.96% gain in stock to Rs. 936.90 on the Bombay Stock Exchange on Tuesday. Investment firm Goldman Sachs also hiked the company’s target price from Rs. 960 to Rs. 1,205. RIL reported a total revenue of Rs. 71,761 crores and a net profit of Rs. 8,265 crores for the last quarter. According to sources, the company expects its operating income to double to $ 14 billion by March 2020. However, the company’s debt also increased Rs. 2.14 trillion at the end of September as compared to Rs. 1.96 trillion as on 31 March 2017. Meanwhile, the company claims Jio will start contributing from the next financial year and can reach operating income of over $ 5 billion by March 2025.
Speaking about the bonds, V. Srikanth, the Joint Chief Financial Officer of RIL, said, “This refinancing transaction was well received by high quality investors across asset managers, insurance companies and banks and helped us achieve substantial savings in interest cost over the life of the notes. We are delighted to have issued 10 year bonds at the lowest coupon ever for an Indian corporate.” RIL believes volume led growth with capex cycle completion, refining margins to outperform peers and telecom business will start contributing positively which lead to a stable growth of the company.
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