The $3 billion financing was closed on March 31 and the $2 billion add-on facility was secured on Tuesday.
New Delhi:
Reliance Industries Ltd and its telecoms arm Jio Infocomm have raised a total of $5 billion in back-to-back foreign currency loans, the largest syndicated loan in India’s corporate history, sources said.
Reliance raised $3 billion from 55 banks last week and Reliance Jio Infocomm secured an additional $2 billion in credit from 18 banks, sources familiar with the development said.
The $3 billion funding was closed on March 31 and the $2 billion add-on facility was secured on Tuesday, they said.
Reliance will use the money raised primarily for its capital expenditures, while Jio would use the money to fund the nationwide rollout of the 5G network.
The $2 billion add-on will be split equally between Reliance and Jio and is likely to be completed by the end of April, they said.
The $3 billion primary syndication involved approximately 55 lenders, including nearly two dozen Taiwanese banks and global giants such as Bank of America, HSBC, MUFG, Citi, SMBC, Mizuho and Credit Agricole.
The new loan from$2 billion has the same terms as the loan signed on March 31 with 55 lenders, including 40 who joined two syndication phases.
The sources said the blowout response was not surprising given the momentum the $3 billion loan had already generated in the senior stage in mid-January when it launched into general syndication.
The oil-to-telecom conglomerate is one of India’s most sought after lenders and has deep banking relationships.
“This was reflected in the remarkable response to the $3 billion loan, as well as the receipt that the $2 billion add-on has already received,” said a senior banker.
Eighteen banks, including the 15 senior MLABs of the $3 billion loan and others participating in the senior phase, are expected to syndicate the $2 billion add-on, which will be split equally for Reliance and Jio, and probably will be completed by end of the month.
MLAB stands for Mandated Lead Arranger and Book Runner.
The size of the add-on is two-thirds that of the original $3 billion loan — quite large and unusual in Asian loan markets for what is effectively an unplanned greenshoe option.
The decision to raise an additional $2 billion stems from the overwhelming response from the market as lenders remain hungry for the blue-chip group that has been inactive in the syndicated loan market in recent years.
Nearly a third — $927 million — of the allocations went to 19 Taiwanese banks that dominated the final list of syndicated lenders, while another eight from Japan collected a combined $276.36 million.
The $3 billion loan will also be split equally between Reliance and Jio, with the latter portion being the first non-recourse loan.
Last year, Jio secured a $750 million club loan with a five-year term for capital expenditures.
Reliance Industries Ltd (RIL)’s latest syndicated offshore loan was a $1.45 billion dual-currency financing, completed in 2020, consisting of a $1.1 billion piece with a 3.5-year term and a share of 38.45 billion yen with a five-year term.
The yen loan offered an all-in price of approximately 78 bps – 81 bps, while the US dollar tranche paid an all-in of 101.5 basis points (bp) based on a margin of 79 bps over Libor and an average maturity of 3.25 years.
The $3 billion loan signed last week is the Reliance Group’s largest syndicated loan and is split into tranches of $1.15 billion and 48.78 billion yen (USD$380 million) with an average term of 5.25 years for RIL, and five-year portions of $1.2 billion and 41.81 years. billion yen for Jio.
ANZ, Bank of America, BNP Paribas, Credit Agricole CIB, Citigroup, DBS Bank, First Abu Dhabi Bank, HSBC, Scotiabank, Standard Chartered Bank, State Bank of India and United Overseas Bank were the senior MLABs on the US dollar tranches for both borrowers .
Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp underwritten the yen tranche for Jio’s loan, while Credit Agricole also borrowed on the yen portion for RIL’s loan in addition to the three Japanese mega banks.
DBS is the global coordinator for the$2 billion add-on and was also in that role for the $3 billion loan, which paid a top-level all-in price of 146 bps and 156 bps for the US dollar portions for RIL and Jio, respectively.
The yen tranches paid top-level all-ins of 66.50 bps and 76.50 bps respectively for the two borrowers.
The US dollar pieces for RIL and Jio pay interest margins of 121 bps and 128 bps respectively over the life of the SOFR (Secured Overnight Finance Rate), while the yen pieces offer 58 bps and 65 bps above the Tokyo Overnight Average Rate (Tonar ).
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