Reliance Industries Ltd. (RIL) is likely to raise up to $1.5 billion via foreign loans, The Economic Times reported citing people familiar with the development. Along with these funds, its telecom arm Reliance Jio is also reportedly in conversation with lenders to raise up to $2.5 billion through foreign loans.
RIL is planning to raise the funds through external commercial borrowing (ECB). The same has reportedly been planned to support its capital expenditure plan and hence, the Ambani-led company is in talks with several groups of lenders, the report said.
The report mentioned that Barclays, HSBC, MUFG Bank, Bank of America, and Citigroup were among the lenders RIL is in touch with. While the mentioned loans are likely to be for a period of five years, they are expected to be priced 130-150 basis points above the Secured Overnight Financing Rate (SOFR), the report mentioned.
With regards to this funding via foreign loans, there is also a chance that RIL may not require prior regulatory approvals as the Reserve Bank of India (RBI) recently relaxed the norms governing ECB of up to $1.5 billion.
While the report mentioned that neither RIL nor other banks commented on the matter, it went on to elaborate on Reliance Jio’s part in this equation as well.
As per the report, Reliance Jio is also in talks with entities like Bank of America, BNP, HSBC, and Societe General (SoCGen) to arrange an offshore syndicated loan. This loan is also likely to help fund 5G network gear buys from Ericsson and Nokia, as per the information shared by people familiar with the matter.
Unlike the previously mentioned loans, this overseas loan is likely to be priced after adding an estimated 65 basis points over the SOFR. In case, in future, if more banks join, Reliance Jio may also size up the loan, as per the report.
The finalisation of this entire process may happen soon as Reliance Jio is also looking to buy 5G network gear worth $2.5 billion. While recently the company has launched its 5G beta services in Delhi, Mumbai, Kolkata and Varanasi, very soon, it plans to expand its network throughout the country.
