Reliance Industries Ltd on Tuesday returned to the debt market for the second time raising a total of ₹10,060 crore through bonds of different tenors.
RIL with a long term debt rating of AAA, raised ₹4235 crore for a 3 year 4 month period at a fixed coupon rate of 7.05%. The company raised ₹825 crore for a 3 year period at a fixed coupon rate of 6.95% and the remaining ₹5000 crore for a 2 year 10 month period at a coupon rate of 6.95%.
In the first round of fund raising, RIL had raised ₹8500 crore in two parts at a coupon rate of 7.2%. The fixed rate issue saw it raise ₹4,000 crore for a three-year period at a fixed coupon rate of 7.2%. The floating rate issue saw the company raise ₹4,500 crore for a coupon rate of 7.2%.
Dealers indicate that the lower coupon on the non-convertible debenture is an indication of improved market conditions. Also the system is flush with surplus liquidity of ₹8 lakh crore after RBI decided to provide extra liquidity to banks to fund companies impacted by Covid.
“Market is sufficiently liquid now and has appetite for the good names. As the risk capital is limited though the liquidity is enough, it’s a lot more cautious for credit names. For NBFC’s, there is decent appetite for AAA, retail mono line asset financing and large business house backed non banks. But in current environment where risk is not fully known due to we amidst the pandemic fear, most institutional investors are a lot cautious and careful,” said Ajay Manglunia, managing director and head, fixed income at JM Financial.
In April, the board of RIL had approved a proposal to raise up to ₹25,000 crore through NCDs in tranches, on a private placement basis. The company is looking at refinancing ₹10,000 crore worth of non-convertible debentures (NCDs) maturing in this financial year, and a portion of high cost loans with private placement of new NCDs. This move will help the company reduce the cost of debt, especially in a low interest rate scenario.
