Reliance Industries Limited and its subsidiary Jio Infocomm have raised a total of $5 billion in foreign currency loans, making it the largest syndicated loan in India’s corporate history. According to sources, Reliance raised $3 billion from 55 banks last week, while Jio secured an additional credit of $2 billion from 18 banks. The primary syndication involved nearly two dozen Taiwanese banks and global giants like Bank of America, HSBC, MUFG, Citi, SMBC, Mizuho, and Credit Agricole, among others.
Reliance Industries is expected to deploy the funds raised towards its capital expenditure, while Jio would use the money to finance its nationwide 5G network rollout. The new loan of $2 billion has the same terms as the borrowing signed on March 31, and the add-on facility is likely to be wrapped up by the end of April. The decision to raise another $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.
The $3 billion borrowing is also split equally for Reliance and Jio, with the latter’s portion being its first non-recourse loan. Nearly a third of the allocations went to 19 Taiwanese banks that dominated the final list of lenders in the syndicate, while another eight from Japan took $276.36 million combined. The USD 3 billion borrowing signed last week is Reliance group’s largest syndicated loan and is split into $1.15 billion and 48.78 billion yen (USD 380 million) tranches with an average life of 5.25 years for RIL, and five-year portions of $1.2 billion and 41.81 billion yen for Jio.
The decision to raise another $2 billion comes from the overwhelming response to 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 yen loan offered an all-in pricing of around 78 bp – 81 bp, while the US dollar tranche paid an all-in of 101.5 basis point (bp) based on a margin of 79 bp over Libor and an average life of 3.25 years. The US dollar portions for RIL and Jio pay interest margins of 121 bp and 128 bp over term SOFR (Secured Overnight Finance Rate), respectively, while the yen pieces offer 58 bp and 65 bp over the Tokyo Overnight Average Rate (Tonar).
DBS Bank acted as the global coordinator for the $2 billion add-on and was also in that role for the $3 billion borrowing, which paid top-level all-in pricing of 146 bp and 156 bp for the US dollar portions for RIL and Jio, respectively. Mizuho Bank, MUFG, and Sumitomo Mitsui Banking Corp underwrote the yen tranche for Jio’s loan, with Credit Agricole also lending alongside the three Japanese mega banks on the yen portion for RIL’s borrowing.
In conclusion, Reliance and Jio’s $5 billion syndicated loan is a remarkable feat and the largest in India’s corporate history. It demonstrates the blue-chip group’s deep banking relationships and market demand for their services. The loan will be used to fund capital expenditure for Reliance and finance the nationwide 5G network rollout for Jio. The overwhelming response from lenders shows the market’s confidence in the group’s long-term potential.
