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Reliance Industries Ltd (RIL) is planning to raise at least $1 billion by selling 10-year bonds to overseas investors. The company is expected to make an announcement in this regard on Thursday.
This is the first sale of 10-year bonds by the company in more than a year. Bank of America-Merrill Lynch, Citibank, HSBC and Standard Chartered are the lead bankers to the issue. Barclays, Deutsche Bank, JP Morgan Chase, Morgan Stanley, Australian and New Zealand Banking Group, BNP Paribas, Credit Agricole CIB and The Royal Bank of Scotland are also involved.
Capital spendIn a rating released on Wednesday, Standard & Poor’s (S&P) assigned the company a BBB+ long-term rating just above the BBB- it gives for the Indian sovereign.
“Reliance intends to use the proceeds to fund its ongoing capital expenditure mainly in the refining and petrochemical sector in India. We expect the current investment in large refining and petrochemical sector projects will help Reliance to improve its profitability from fiscal 2017 because we anticipate that the company will complete most of these projects by March 2016,” S&P said in a release.
“We project that Reliance's ratio of debt to EBITDA will continue to rise from 2.0x in fiscal 2014 and peak in fiscal 2016 because of large capital expenditure on projects. This is despite our expectation that the company would review capital expenditure in its exploration and production business in light of the lower oil and gas price environment. Nevertheless, we expect the ratio to return to about 2.0x by fiscal 2018, supported by improved profitability,” it added.
Profit, turnoverReliance Industries announced that its profit after tax was lower by 4.5 per cent at ₹5,256 crore as against ₹5,502 crore in the corresponding period of the previous year.
The company achieved a turnover of ₹96,330 crore ($15.3 billion) for the quarter ended December 31, 2014, a decrease of 20.4 per cent, compared with ₹121,077 crore in the corresponding period of the previous year.
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