RIL set to refinance $1.5 billion overseas loans to reduce borrowing cost

24-Nov-2020

Reliance Industries (RIL), owned by Asia's richest person Mukesh Ambani is planning to refinance overseas loans worth $1.5 billion in order to trim borrowing cost. The new debt facilities would cost RIL up to 70 basis points less, helping save on interest payments, the Economic Times mentioned in a report citing multiple sources with direct knowledge of the negotiations. The oil-to-retail conglomerate is in talks with Standard Chartered Bank, Citigroup, State Bank of India, MUFG, HSBC, and DBS Bank. The loan syndication will be launched in the next two-four weeks, the publication mentioned. The refinancing negotiations are coming at a time when the Mukesh Ambani-owned firm has raised nearly $12 billion through strategic investments by global firms in its telecom and retail units. The new loan will be used to repay the debt of Reliance Holding USA (RUSHA), a subsidiary that was earlier this year amalgamated with another unit, Reliance Energy Generation and Distribution Ltd., to simplify its corporate structure. The National Company Law Tribunal approved the amalgamation of the two subsidiaries in August. �There are some bank loans maturing next two months, which the company will refinance at a lower cost,� one of the sources mentioned above told the publication. The loan is expected to be priced at LIBOR (London Interbank Offered Rate), a global rate gauge, plus 95 basis points. The spread or differential was about 165 basis points in earlier loans. A basis point is 0.01 percent, the business daily mentioned. According to an earlier ET report, RIL raised about $1 billion, with the State Bank of India and MUFG contributing about $600 million together. The October loans were availed to repay the first series of high-cost debt, which were bond maturities. The second loan now under process will help to retire costlier bank loans, said sources. RHUSA raised its maiden dollar bonds in 2010, offering 4.5% with 10 and 30-year maturities. The 10-year paper came up for maturity on October 20. RIL has chosen loan syndication that takes less time to be arranged than a conventional offshore bond sale.