Reliance Industries (RIL) Thursday said it has raised $1 billion through a dollar bond issue for the company's ongoing capital expenditure.
According to market analysts, raising the $1 billion through a 10-year bond is significant, as the company did not pay any new-issue premium.
This is significant as paying a new-issue premium is now becoming a standard practice with many global issuers paying a premium to price their offerings in the markets — and that too when there is immense volatility in oil prices.
"This transaction opened up the market for private sector corporate issuances out of Asia, against the backdrop of challenging market conditions,” V. Srikanth, joint chief financial officer of RIL, said in a statement.
"We successfully concluded a swift intra-day execution to capitalize on the market window and lock in long term funding at an attractive cost.”
According to Srikanth, repeat investors participated in the transaction which was supplemented by new high quality investors including central banks and real money accounts.
The company said the investors included Bank of America, Merrill Lynch, Citigroup Global Markets, and The Hongkong and Shanghai Banking Corporation.
"The notes have been priced at 240 basis points over the 10-year 'US Treasury Note', at a price of 98.998 to yield 4.249 percent,” the statement said adding that notes were over-subscribed 4.5 times across 272 accounts.
The notes, which will be denominated in US dollars, bear fixed interest of 4.125 percent per annum with interest payable semi-annually in arrears.
The statement added that in terms of geographic distribution, the notes were distributed 31 percent in Asia, 25 percent in Europe and 44 percent in the United States.
In terms of investor distribution, the notes were distributed to high quality fixed income accounts: 62 percent to fund managers, seven percent to sovereign wealth funds, 18 percent to insurance companies and pension funds and 13 percent to banks and private banks.
