BackReliance Industries raises $200 million via Taiwan bond sale
RIL, the first Indian firm to complete such as sale, says it raised the funds by issuing 20-year notes at a coupon rate of 5%
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Reliance Industries Ltd (RIL) has raised $200 million by selling long-term bonds to investors in Taiwan, making it the first Indian firm to complete such a sale.
Bonds issued in Taiwan, in currencies other than the New Taiwan Dollar, are known as Formosa bonds, a market that has been picking up fast due to the long-term funds available for investment with the Taiwanese insurers.
RIL is the first company in Asia to tap this market.
In a notice to the exchanges on Tuesday, RIL said that it had raised the funds by issuing 20-year notes at a coupon rate of 5%.
“These notes, denominated in US dollars, have been issued primarily to Taiwanese life insurance companies and are proposed to be listed on the Taipei Exchange," said the company, adding that the funds will be used for the company’s ongoing capital expenditure.
Deutsche Bank AG, Taipei Branch and HSBC Bank (Taiwan) Ltd managed the issue.
“This is a market which allows issuers the ability to access very long-dated bond financing with call options," said a banker while explaining why companies have been tapping the Formosa bond market. He requested anonymity. Bonds with a call option are those that can be redeemed by the issuer before maturity.
According to Randhir Singh, India head (financing) at Deutsche Bank, this is the first Formosa bond out of India, and the longest tenor Formosa bond issued by an Asian corporate.
RIL, which is in the middle of an investment cycle to expand its petrochemical business and launch its 4G (fourth generation) telecom services, has become one of the most active foreign currency borrowers out of India.
On 12 May, Reliance Jio Infocomm Ltd raised $750 million from a consortium of nine banks.
The loan was guaranteed by Korea Trade Insurance Corp. (K-Sure). In January, RIL raised $1 billion through a sale of 10-year bonds to investors across Asia, Europe and the US.
Over the past three years, RIL has raised over $10 billion in overseas borrowings, reported Mint in December. A large chunk of this money is being used for the firm’s telecom venture.
RIL is setting up a countrywide telecom network set to provide high-speed Internet connectivity, communication services and various other digital services in areas such as education, healthcare, security, financial services, government-citizen interface and entertainment.
The firm has so far invested over $14 billion to set up telecom infrastructure but has not announced any date for the roll-out of its services. It is likely to launch voice-based services in at least five cities by June-end, Mint reported in April.
Reliance Jio has a pan-India permit to provide the high-speed 4G voice and data services across 22 telecom circles under the 2,300 megahertz (MHz) band of radio spectrum.
It also has spectrum in the 800MHz and 1800MHz bands in 20 of India’s 22 telecom circles.
The company is also looking to expand its petrochemical capacity by nearly 60% by 2017.
Anup Roy contributed to this story.
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