Reliance Industries Ltd and its telecom arm Jio Infocomm have raised a total of $5 billion in back-to-back foreign currency loans, the largest syndicated loan in the history of Indian companies, sources said.
The $3 billion in financing closed on March 31, and an additional $2 billion facility was secured on Tuesday, they said.
Reliance will use the raised funds mainly for its capital expenditure, while Jio would use the money to finance its nationwide 5G network.
The $2 billion addition will be split equally between Reliance and Jio and is likely to be completed by the end of April, they said.
The US$3 billion primary syndication involved approximately 55 lenders, including nearly two dozen Taiwanese banks as well as global giants such as Bank of America, HSBC, MUFG, Citi, SMBC, Mizuho and Credit Agricole.
The new $2 billion loan has the same terms as the loan signed on March 31 with 55 lenders, including 40 that came together in two stages of syndication.
Sources said the response to the shortfall was not surprising given the momentum the $3 billion in loans had already generated in the main phase in mid-January when general syndication began.
The oil-telecom conglomerate is one of India’s most sought-after lenders and has deep banking relationships.
“This was seen in the remarkable response to the $3 billion loan, but also in the reception it has already received to the $2 billion increase,” one senior banker said.
18 banks, including 15 senior MLABs for the $3 billion loan and others to join in the lead phase, are expected to form a syndicate for the $2 billion raise, which is split equally between Reliance and Jio, and is likely to be completed by the end of the month.
MLAB refers to Mandated Lead Arranger and Book Runner.
The size of the increase is two-thirds of the original $3 billion loan – quite large and unusual in Asian credit markets, effectively an unplanned greenshoe option.
The decision to raise an additional US$2 billion follows an overwhelming market response as lenders remain hungry for the blue-chip group, which has not been active in the syndicated loan market in recent years.
Almost a third – US$927 million – of allocations went to the 19 Taiwanese banks that dominated the final list of lenders in the syndicate, while another eight from Japan took home a combined US$276.36 million.
The $3 billion loan is also split equally between Reliance and Jio, the portion being its first non-recourse loan.
Last year, Jio raised a five-year club loan of USD 750 million for fresh money for capital expenditure.
Reliance Industries Ltd’s (RIL) latest syndicated offshore loan was a US$1.45 billion dual-currency financing completed in 2020, comprising US$1.1 billion over 3.5 years and ¥38.45 billion over five years.
The yen loan offered an all-in price of around 78bp 81bp, while the US dollar tranche paid 101.5 basis points (bp) all-in based on a 79bp margin over Libor and an average life of 3.25 years.
The $3 billion loan signed last week is Reliance Group’s largest syndicated loan and is split into $1.15 billion and ¥48.78 billion ($380 million) tranches with an average life of 5.25 years for RIL and five-year tranches in the amount of 1.2 billion USD. and ¥41.81 billion for Jio.
ANZ, Bank of America, BNP Paribas, Credit Agricole CIB, Citigroup, DBS Bank, First Abu Dhabi Bank, HSBC, Scotiabank, Standard Chartered Bank, State Bank of India and United Overseas Bank were the top MLABs in US dollar tranches for both. debtors.
Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp underwrote the yen tranche of the Jio loan, with Credit Agricole also lending alongside three Japanese megabanks for the yen portion of the RIL loan.
DBS is the global coordinator for the $2bn raise and was also in that role for the $3bn loan, which paid the highest all-in price of 146bp and 156bp for the US dollar tranches for RIL and Jio respectively.
Yen tranches paid all-in highs of 66.50bp and 76.50bp for the two borrowers.
The US dollar pieces for RIL and Jio are paying interest margins of 121 bp and 128 bp over the term Secured Overnight Finance Rate (SOFR), respectively, while the yen pieces are offering 58 bp and 65 bp over the Tokyo Overnight Average Rate (Tonar).