Reliance Industries Ltd has been conferred on IFR Asia's 'Issuer of the Year' Award for 2023 for achieving most optimal pricing for super-sized funding deals while overcoming multiple market challenges. International Financing Review (IFR) is the pre-eminent financial publication globally for fixed income, capital markets, and investment banking news, analysis and commentary.
In a two-page commentary on Reliance that was titled 'Blockbuster Producer', IFR said "the Indian blue chip firm balanced onshore and offshore funding to achieve optimal pricing results from supersized deals". In a tumultuous year for debt markets, it found increased demand from lenders as it reshaped its business to seize future opportunities. Reliance is now the only entity in Asia to have won this prestigious award four times — 2006, 2015, 2018, and 2023. The financing deals in 2023 that enabled Reliance win the award were raising of USD 7.5 billion in syndicated loans — this was the largest amount raised by any corporate in Asia Pacific and the syndication was achieved with largest-ever group of 55 banks.
This also happened to be the most-widely syndicated Indian deal ever. Reliance Jio Infocomm raised its first-ever syndicated loan on the strength of its standalone financials without a guarantee from parent Reliance Industries Ltd (RIL). And even then, the pricing differential between RIL and Jio on the syndicated loans was only 10 bps, indicating the coming of age for Jio in the international financial markets.
USD 5 billion was raised from some of the world's largest export credit agencies (ECAs), including from Sweden, Finland, Canada, and Korea. RIL's Rs 20,000 crore 10-year rupee bond issue was the largest ever by a non-financial corporate and was significantly oversubscribed. It achieved RIL's lowest coupon, and the tightest spread for a rupee bond -- just 40 bp over the Indian government 10-year security, and better than many state government bonds. In June, RIL signed a USD 2.45 billion refinancing comprising a USD 2.105 billion 4.25-year tranche and a Yen 49.682 bilion (USD 351 million) 5.25-year tranche.
As well as finding demand from a diverse group of 34 lenders, Reliance also managed to reduce its all-in cost. The IFR Asia article explains the challenging scenario for corporate fundraising in 2023 that Reliance navigated successfully. "2023 was not an easy year to raise financing. High US dollar rates had finally fed through to Asia's offshore loan market, causing the primary market to freeze up. Meanwhile, the US dollar bond market was volatile and the cost of funding was far higher than onshore." Additionally, India raised the withholding tax on external commercial borrowings from 5 per cent to 20 per cent in July 2023, effectively raising the cost of borrowing for corporates.
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