Reliance and Jio secure $5bn in largest syndicated loan in India’s corporate history
- ByStartupStory | April 5, 2023
Reliance Industries and Jio Infocomm have reportedly raised $5 billion in foreign currency loans, marking the largest syndicated loan in India’s corporate history. Reliance secured $3 billion from 55 banks, while Jio obtained an additional $2 billion from 18 banks. The $3 billion financing closed on March 31, while the $2 billion add-on facility was secured on Tuesday. Reliance intends to allocate the majority of the funds raised to its capital expenditures, while Jio plans to utilize the funds for its nationwide 5G network rollout.
Reliance Industries and Jio Infocomm have raised a total of $5 billion in back-to-back foreign currency loans, marking the largest syndicated loan in India’s corporate history. The $3 billion financing closed on March 31, while Jio secured additional credit of $2 billion from 18 banks. The funds raised will mainly go towards Reliance’s capital expenditure and Jio’s nationwide 5G network rollout. The new loan of $2 billion has the same terms as the March 31 borrowing, with the funds expected to be split equally between Reliance and Jio and wrapped up by the end of April.
Reliance Industries Ltd and its telecom arm Jio Infocomm have deep banking relationships and are considered highly desirable credits from India. According to a senior banker, this was evident from the overwhelming response to the $3 billion loan and the positive reception the $2 billion add-on has already received. Eighteen banks, including the 15 senior Mandated Lead Arrangers and Book Runners of the $3 billion loan, are expected to participate in the syndicate for the $2 billion add-on. The add-on, which is split equally for Reliance and Jio, is two-thirds the size of the original loan and is likely to be concluded by the end of the month. It is unusual for Asian loan markets to have such a large unplanned greenshoe option.
Reliance Industries Ltd and its telecom arm Jio Infocomm have raised a total of $5 billion in back-to-back foreign currency loans, the largest syndicated loan in India’s corporate history. The $2 billion add-on is a result of 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. The $3 billion borrowing is split equally for Reliance and Jio, with the latter’s portion being its first non-recourse loan. The loan attracted around 55 lenders, with nearly a third of the allocations going to 19 Taiwanese banks. Reliance’s last syndicated offshore borrowing was a $1.45 billion dual-currency financing completed in 2020.
The US dollar tranche of the $3 billion borrowing had an all-in pricing of 101.5 basis points, while the yen loan had an all-in of around 78-81 basis points. The loan was split into tranches of $1.15 billion and 48.78 billion yen for RIL, and $1.2 billion and 41.81 billion yen for Jio, with an average life of 5.25 years for RIL and five years for Jio. ANZ, Bank of America, Citigroup, DBS Bank, HSBC, and other banks served as senior MLABs on the US dollar tranches for both borrowers, while Mizuho Bank, MUFG, and Sumitomo Mitsui Banking Corp underwrote the yen tranche for Jio’s loan. Credit Agricole also lent alongside the three Japanese banks on the yen portion for RIL’s borrowing.
DBS played a key role as a global coordinator in both the $3 billion borrowing and the $2 billion add-on. The US dollar portions for both RIL and Jio in the $3 billion borrowing had all-in pricing of 146 bp and 156 bp, respectively. Meanwhile, the yen tranches had all-in pricing of 66.50 bp and 76.50 bp, respectively. For the $2 billion add-on, the interest margins for the US dollar portions of RIL and Jio are 121 bp and 128 bp over term SOFR, respectively, while the yen pieces offer 58 bp and 65 bp over the Tokyo Overnight Average Rate (Tonar).
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