The Hindu Business Line : Reliance Infocomm seeking Rs 1,500-crore term loan

RELIANCE Infocomm Ltd has sounded out banks and financial institutions for raising term loans in excess of Rs 1,500 crore for meeting some of its funding requirements.

However, when contacted, the company refused to comment.

But banking sources said that the company had indicated its requirement to some of the large public and private sector banks.

Reliance Infocomm is expected to appoint a lead arranger for the large syndication shortly for raising the funds, they added.

The company's fund requirement has triggered a slew of offers from most banks in India and foreign banks as well.

Given the highly competitive conditions prevailing, current indications are that that some of the banks are prepared to undercut each other for a large slice of this prestigious syndication pie.

The bankers said that pricing of the term loans was turning to be a tricky issue.

Reliance Infocomm is not prepared to pay any interest rates linked to the prime lending rates.

Instead, bankers said, it had indicated that it was looking for a pricing linked to Government securities (G-Sec) yields.

They added that it would be looking for a pricing of about 100 basis points over these yields.

(Ten-year yields are currently in the region of 5.10 per cent.)

Consequently, bankers expect its term loan pricing to be close to about 6.25 per cent, making it the most aggressively priced term loan in the country.

This is the first time that it is tapping banks for funds since launching the services in 2002.

The sources said that the company also had the option of tapping the external commercial borrowing (ECB) markets.

According to them, the original proposal was to raise funds through this route.

However, it has chosen to sound out the domestic markets partly in view of the Government clamping down on ECBs.

Besides, international interest rates have also begun hardening.

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