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Oil and gas giant Reliance Industries has raised $800 million through a perpetual bonds issue in the overseas markets to fund its capex plans in its exploration and refinery business. The coupon rate was 5.875 per cent to be paid semi-annually. The issue also comes with a call option wherein the issuer has the option to buy back the bonds at the end of five years.
According to RIL officials, HNIs and insurance companies have subscribed to the bond issue, which got bids worth $3 billion.
Using rate scenario
The company decided to go ahead with the issue rather than utilise its Rs 82,000 crore cash balance for the quarter ended December 31, 2012, to take advantage of the comparatively cheaper finance available overseas for raising debt.
“The interest rates are at historical lows and it is a good time for Reliance to raise long-term money. Besides, the long-term nature of the bond is in line with the long-term assets of the company,’’ RIL’s Chief Financial Officer Alok Agarwal said.
“We also wanted to take advantage of reduction of withholding taxes on overseas borrowing,” he added.
Last year, the government had reduced the withholding tax on foreign borrowing by Indian companies to 5 per cent from the earlier 20 per cent.
The RIL stock closed at Rs 899.05 on Wednesday, up 1.87 per cent, on the BSE.
Manisha.jha@thehindu.co.in
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