Mumbai: Reliance Industries Ltd plans to raise $500 million (around Rs.2,700 crore today) by selling dollar-denominated unsecured perpetual notes, according to a company executive who spoke on condition of anonymity.
Rating company Standard and Poor’s (S&P) has assigned a “BBB long-term issue rating” to the bonds, it said in a note issued on Monday.
Citigroup Global Markets Inc., Bank of America Merrill Lynch, Hongkong and Shanghai Banking Corp. Ltd, Barclays Capital Plc, Deutsche Bank AG, JPMorgan Chase and Co. and Royal Bank of Scotland Group Plc are managing the bonds sale which opened on Monday morning, the company executive said.
The notes have been priced at 6%, he added.
The bonds were a safe bet and, hence, attractive to investors given the company and India’s growth prospects and Reliance Industries’ financial strength, the company official said.
“Reliance intends to use the proceeds to fund its ongoing capital expenditure in the exploration and refining sector in India,” S&P said in its note. “The rating on Reliance reflects the company’s strong competitive position and good business diversity. In addition, the company has low leverage and strong cash flows and liquidity.”
Reliance Industries’ vulnerability to the cyclical nature of its industries and commodity prices; the company’s exposure to country risks in India and falling gas production at its D6 offshore field in the Bay of Bengal were some of the challenges outlined by S&P that “temper these strengths”.
The Mukesh Ambani-led firm has announced a $12 billion capital expenditure plan to boost capacity at its refining and petrochemicals complex at Jamnagar in Gujarat.
In February 2012, Reliance Holding USA Inc. had raised $1.5 billion by selling bonds to fund capital expenditure in its US business operations, comprising mostly shale gas exploration and production. In October 2010, it had raised another $1.5 billion through bonds.
Reliance Industries had cash and cash equivalents worth Rs.80,962 crore as on 31 December.
Shares of Reliance Industries fell 1.56% to close at Rs.897.65 a piece on Monday on BSE Ltd, while the benchmark index, Sensex, closed at 20103.35 points.