RIL set to raise $1.5 bn in overseas loans

RIL set to raise $1.5 bn in overseas loans

Billionaire Mukesh Ambani owned oil to retail conglomerate Reliance Industries (RIL) is planning to raise up to $1.5 billion in overseas loans to refinance some of its existing debt facilities. The move is expected to cut cost up to 70 basis points, helping save on interest payments.
RIL is in talks with Standard Chartered Bank, Citigroup, State Bank of India, MUFG, HSBC, and DBS Bank. The loan syndication will be launched the next two-four weeks.

Interestingly, the decision to search for refinancing negotiations are coming at a time when the Mukesh Ambani-owned firm has raised nearly $22.48 billion through strategic investments by global firms in its units.
The loan will be used to repay the debt of Reliance Holding USA (RUSHA), a subsidiary that was earlier this year amalgamated with another unit, Reliance Energy Generation and Distribution Ltd., to simplify its corporate structure. The National Company Law Tribunal approved the amalgamation of the two subsidiaries in August.
The loan is expected to be priced at LIBOR (London Interbank Offered Rate), a global rate gauge, plus 95 basis points. The spread or differential was about 165 basis points in earlier loans. A basis point is 0.01%.
About a month ago, the company raised about $1 billion, with the State Bank of India and MUFG contributing about $600 million together. The loans were availed to repay the first series of high cost debt, which were bond maturities.

RIL has chosen loan syndication that takes less time to be arranged than a conventional offshore bond sale.
Also for loans, principal and interest must be repaid every year, unlike in bonds, where only interest is paid annually.

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