RIL plans Rs 12,500 crore rupee bond sale, first since 2023

Reliance Industries, India’s largest company by cash balances, is planning to tap the domestic debt market with a Rs 12,500-crore five-year bond issue as early as next week, according to a source. If completed, it would be the largest listed corporate bond issuance in the domestic market this year.

RIL, which has a cash pile of Rs 2.46 lakh crore against net debt of Rs 1.23 lakh crore, is likely to offer a coupon of 7.47% on the five-year notes. The issue will have a base size of Rs 10,000 crore and a greenshoe option of Rs 2,500 crore.

The proposed coupon is significantly lower than the average yield of around 7.87% on AAA-rated corporate bonds of similar tenor.

The timing of the issue is significant as the market expects the Reserve Bank of India to consider tightening monetary policy at its next meeting early next month amid concerns over the liquidity impact of the huge dollar inflows through the special swap windows. Dollar inflows under the scheme have reached $137.43 billion.

The bond issue also comes ahead of another major fundraising exercise by the Reliance group. Its subsidiary Jio Platforms is preparing to launch what is expected to be India’s largest IPO on record, seeking to raise close to Rs 38,000 crore after receiving Sebi approval last week. The issue is expected to hit the market before Diwali, which falls on November 8.

Domestic companies have raised around Rs 8.9 lakh crore through bonds so far this year, down about 11% over the trailing 12-month period. While yields on AAA-rated three-year corporate bonds have risen 70 basis points over the past year, the weighted average lending rate on fresh bank loans has declined by 29 basis points during the period.

Axis Bank, HDFC Bank, ICICI Bank and Yes Bank are the lead arrangers to the proposed issue, the source said.

The issue is expected to provide a boost to the domestic corporate bond market after a relatively slow start to the year, with companies increasingly turning to bank loans to meet their financing needs amid lower borrowing costs.