RIL funding: RIL seeks to raise up to $1.5 billion, Jio $2.5 billion via foreign loans

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Reliance Industries Ltd (RIL) and Reliance Jio are in talks with lenders to raise up to $1.5 billion (about ₹12,400 crore) and about $2.5 billion (about ₹20,600 crore), respectively , in foreign loans, said people familiar with the matter.

RIL is seeking to raise funds through External Commercial Borrowing (ECB) to support its capital expenditure plan. It is in talks with a group of lenders including Barclays, HSBC and MUFG Bank, people familiar with the matter said. The loans, likely for five years, are expected to be priced 130 to 150 basis points above the guaranteed overnight funding rate (SOFR), a global rate indicator that has replaced the interbank offered rate. in London (Libor). Bank of America, Citigroup, Crédit Agricole, DBS Bank and Mizuho Bank are among others in discussion with RIL.

The company does not need prior regulatory approval as the Reserve Bank of India recently relaxed ECB rules up to $1.5 billion.

RIL and the banks did not comment on this.

Reliance Jio, for its part, is in talks with Bank of America, BNP, HSBC and Société Générale (SocGen) to arrange an offshore syndicated loan to finance purchases of 5G network equipment from Sweden’s Ericsson and Finland’s Nokia, several people familiar with said matter.

The overseas loan is expected to be priced after adding about 65 basis points to the secured overnight funding rate (SOFR), a new global rate indicator, the sources added. In the future, Jio may even increase lending as more banks may join the syndication.

The duration could be of the order of three to seven years.

Separately, two European export credit agencies – EKN and Finnvera – can issue guarantees to global lenders for providing the offshore loan to Jio, one of the people quoted above told ET.

“The guarantees offered should increase the comfort level of lenders as they will reduce funding costs,” the banker said.

Jio, Ericsson, Nokia, EKN and the banks did not comment on the matter.

“Finnvera cannot give any information about the projects we finance, or even say whether a company is our client or not…it’s based on Finnish banking law,” said a spokesperson for the Finnish agency. export credit in response to ET’s question.

Since the two European export agencies – EKN and Finnvera – are from countries rated two to three notches above India’s BBB sovereign rating, any guarantee from them would be stronger and help to better manage financing costs for any borrower, sources said.

Reliance Jio is likely to finalize the process as soon as it plans to purchase 5G network hardware worth around $2.5 billion from the two European vendors. It launched its 5G beta services in Delhi, Mumbai, Kolkata and Varanasi from October 5 and plans to deliver 5G to every city, taluka and tehsil in India by December 2023.

Parent company RIL, meanwhile, plans to invest Rs 75,000 crore in its petroleum-chemicals business over the next three years to expand the capabilities of existing and new value chains, Chairman Mukesh Ambani told reporters. shareholders at the company’s 45th annual general meeting held on August 29.

In July, the RBI doubled the fundraising limit via the ECB to $1.5 billion under the automatic route, in hopes that inflows of foreign funds could cushion the rupiah’s fall against the dollar. The relaxed regulations are in effect until the end of this calendar year.

In August, Housing Development Finance Corp, the country’s largest mortgage lender, raised $1.1 billion via the ECB. It offered 90 basis points above SOFR. Rates have since increased globally.

Shares of Reliance Industries closed at Rs 2,433.25 on BSE Friday.

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