Reliance Industries Ltd, India's richest firm and owner of the world's biggest refining complex, said today it has raised $1.5 billion in an issue of dollar bonds.
A $1 billion, 10-year tranche of the issue was priced at 205 basis points over US Treasuries, while another $500 million 30-year bond was priced at 240 basis points above Treasuries, the company said.
The transaction was nearly 7.8 times over-subscribed, with total order book size on the two-part issue at $11.6 billion, RIL said.
The proceeds from the issue by RIL's unit Reliance Holding USA Inc and guaranteed by the parent company will be used in refinancing existing debt, business investments and general corporate purposes, the company said in a statement.
Reliance, controlled by billionaire Mukesh Ambani, has spent $3.4 billion since April buying US shale-gas assets. Ambani, ranked by Forbes India as the nation's richest person with $27 billion of wealth, told shareholders in June that Mumbai-based Reliance is planning ''mega'' investments in power generation as well as expansion in telecommunications.
Proceeds from Reliance Holdings USA's senior unsecured bonds, guaranteed by Reliance Industries, will be used to refinance $765 million of loans for shale-gas ventures, for general corporate purposes and for ''further business investments that may be pursued,'' Moody's Investors Service said in a 4 October statement.
The sale was Reliance's first benchmark-sized offering in the US currency. The company raised $162 million in 2007 from 6.24 per cent notes due in 2017. Benchmark sales are typically at least $500 million.
The company tapped the dollar-denominated bond market as issuance by non-US companies takes the biggest share of sales on record and investment-grade borrowing costs hover near a record low.
Reliance and its units have Rs50,990 ($11.6 billion) of bonds and loans maturing through 2097, according to Bloomberg data. They have Rs10,120 of bonds outstanding.
The latest offering, which has been increased from the $1 billion the market originally expected, would provide investors with rare exposure to a top-flight Indian conglomerate - South Asian companies usually tend to rely on bank loans for funds.
The offering by the Mumbai-based group is likely to boost the country's international bond sales to more than $7 billion this year, significantly higher than the $1.5 billion recorded in 2009.
Earlier this year Indian Oil Corp, the country's biggest refiner, issued $500 million of notes due to mature in 2015 and State Bank of India, the nation's biggest lender, raised $1 billion through a five-year bond at 290 basis points over similar US Treasury bills.
The growing demand for Indian government and corporate debt reflects foreign investors' growing appetite for India's fast-growing economy, which expanded 8.8 per cent in the second quarter from a year earlier.
Reliance's bond issue, which was presented to investors in Singapore, Hong Kong, London and New York, is expected to be subscribed by at least four times.
Reliance has a strong balance sheet, as it posted a year-on-year 32 per cent rise in the quarter ended in June on the back of high gas production and as margins stood at $6.8 a barrel in the same period.
The only concerns analyst have expressed about Reliance is about its more than 100 subsidiaries, many of which are not profitable.
The Royal Bank of Scotland, Bank of America Merrill Lynch, Citigroup and HSBC are the bookrunners on the issue.