Reliance Industries secures USD 5 bn back-to-back loans from foreign banks

Mukesh Ambani-led Reliance Industries (RIL) has secured $5 billion in back-to-back foreign currency loans. 
Reliance Industries Limited (RIL).(Photo | www.ril.com)
Reliance Industries Limited (RIL).(Photo | www.ril.com)

NEW DELHI:  Mukesh Ambani-led Reliance Industries (RIL) has secured USD 5 billion in back-to-back foreign currency loans.

Reliance Jio Infocomm Ltd, a unit of RIL, secured the USD 2 billion add-on facility on Tuesday with same terms as its recent USD 3 billion syndicated loan. The oil-to-telecom conglomerate last week raised USD 3 billion from 55 banks and its telecom arm secured additional credit of USD 2 billion from 18 banks. 

As per industry insiders, the new loan will carry the same terms as the $3 billion borrowing signed on March 31 with 55 lenders, including 40 that joined in two phases of syndication.  According to industry insiders, the funds will mainly be allocated towards RIL’s capital expenditures and Jio’s nationwide 5G expansion. 

“Eighteen banks, including the 15 senior MLABs (mandated lead arrangers and book-runners) of the USD 3 billion loan and others joining in the senior phase, are expected to form the syndicate for the $2 billion add-on, which is split equally for RIL and Jio, and is likely to be wrapped up by the end of the month,” said sources. 

According to the people known to the development, the conglomerate is one of the most sought-after for credits and enjoys deep banking relationships.  They said this was visible from the response to the USD 3 billion loan and also from the reception of the USD 2 billion add-ons has already been received.

“The decision to raise another USD 2 billion stems from the overwhelming response from the market as lenders remain hungry for the blue-chip group that has not been active in the syndicated loan market in recent years,” they added. Nearly a third, USD 927 million of the allocations, came from 19 Taiwanese banks that dominated the final list of lenders in the syndicate, while another eight from Japan it took USD 276.36 million combined. 

‘Vi’s inability to raise fund can lead to duopoly’

The inability to raise funds by debt-laden telecom operator Vodafone Idea (Vi) can lead to a duopoly in the Indian telecom market and that could negatively impact consumers, said a report by data and analytics company GlobalData.

The report also suggested that the government should intervene to ensure that there is healthy competition in the telecom market and that consumers have access to high-quality, affordable services.

“The government may need to intervene to ensure there is healthy competition in the market. Survival of Vi is necessary to avoid a duopoly in the Indian 5G market,” said Charan Padala, Principal Analyst at GlobalData. 

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