Issuer of the Year

IFR Asia Awards 2018
10 min read
Steve Garton

In a tough year for many emerging markets, India’s biggest private sector company completed its most remarkable funding programme so far. For its commitment to expanding its funding sources, and for its impeccable timing, Reliance Industries is IFR Asia’s Issuer of the Year.

Reliance Industries surpassed its own high standards in 2018 with a series of groundbreaking debt financings that built a broad funding base for both the group’s traditional hydrocarbon and new consumer businesses.

India’s most profitable company raised close to US$9.5bn during IFR’s review period – its biggest annual haul on record – through a combination of bonds, loans and export credit financings. Despite the significant volatility in the financing markets, Reliance raised US$6.25bn from international banks and bonds, and a further US$3.15bn from the Indian market. Almost 90% of the funds raised were at maturities of over three years.

Reliance is hardly a new name in Asia’s capital markets – and is a repeat winner of this award – but it shows no sign of taking its access to credit for granted. In a testing year for many Asian issuers, its prudent funding plan and commitment to diversification stood out as a shining example for others to follow.

Reliance’s reach was especially impressive. Its latest US dollar syndicated financing attracted 44 lenders, a record for any Reliance financing, while its first Samurai loan, in the name of telecom business Reliance Jio, broadened its relationships in Japan.

“We have focussed on expanding the number of partners we work with,” said Vineyesh Sawhney, senior vice president and head of financial resources. “We know markets can change very quickly.”

Reliance has embarked on a massive expansion over the past few years in an effort to diversify beyond its traditional petroleum and petrochemicals business. It has spent something approaching US$35bn on the Jio telecom network alone, as well as building a consumer business that now boasts 9,000 points of sale across the country.

The group has also expanded its Jamnagar refinery and petrochemicals complex – already the world’s largest – with a third phase that has involved laying 6,300 kilometres of new pipes.

With such big numbers in mind, Reliance has been careful to spread its funding requirements across multiple markets and asset classes, to avoid flooding the market or relying too heavily on any single source of finance.

But it is also nimble enough to take advantage of opportunities as they arise. At the start of IFR’s review period in November 2017, it locked in the lowest 10-year coupon ever seen for a US dollar bond from India’s corporate sector, raising US$800m at just 130bp over US Treasuries.

The 3.667% bonds were sold at par and inside initial price guidance of 150bp area, setting a record for Triple B rated corporate issuers in Asia ex-Japan since the financial crisis.

That was a marked improvement on Reliance’s last 10-year issue in January 2015, when it achieved a spread of 240bp, and a substantial saving over the 5.875% coupon on a US$800m senior perpetual bond that was approaching its call date in February. Given the fixed-for-life structure on the perpetual, Reliance was under no pressure to redeem it at the first opportunity, but the terms of a new 10-year benchmark were too good to resist.

“We saw a unique opportunity to refinance the perpetual at a significant saving,” said Sawhney. “Even though there was no penalty after the first call date, the coupon was relatively high. Over the 10-year term the new bond will save us close to US$200m in coupon payments.”

The coupon on the new 2027 bonds will cost Reliance US$29.3m a year, versus US$47m on the senior perp.

Timing was crucial. Had Reliance waited until February, when the US 10-year benchmark jumped to 2.9%, the equation would have been far less attractive.

The November 2017 issue came days after Moody’s raised India’s sovereign rating to Baa2 from Baa3, lifting it above the lowest rung of investment grade. S&P and Fitch both rate India BBB–.

Given that Reliance Industries was already rated above the sovereign at Baa2/BBB+ (Moody’s/S&P), the upgrade had little direct impact on the trade, but it did provide a positive backdrop.

Bank of America Merrill Lynch, Citigroup and HSBC were joint global coordinators, as well as joint active bookrunners with Barclays, JP Morgan and Standard Chartered.


All told, Reliance Industries produced revenues in the financial year to March 2018 of Rs4.3trn (US$66bn at the time), earning a net profit of Rs361bn. The company, however, still works hard to engage new lenders, particularly answering questions over the expansion of the retail business and Jio, which it expects will be big drivers of growth in the future.

Reliance wrapped up two major syndicated loans in 2018, setting new standards in both cases.

Reliance Jio Infocomm in April signed a ¥53.5bn (US$498m) seven-year Samurai loan with the three Japanese megabanks – Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp.

The Japanese deal, guaranteed – as with all of Jio’s financings – by parent Reliance Industries, was the first time the group had ventured into the Samurai loan market, as well as the biggest deal of its kind for an Asian corporate borrower.

The effort involved symbolised Reliance’s determination to broaden its funding sources. Presentations, information memoranda and facility documents needed to be translated into Japanese, and management spent time on a Tokyo roadshow to help drive the syndication.

“Our objective was to develop the market,” said Sawhney. “It paid off well – we had subscriptions for almost US$200m.”

Eight banks joined the deal in general syndication, according to LPC data. Mizuho, MUFG and SMBC were mandated lead arrangers, bookrunners and underwriters on the loan, which offered a top-level all-in pricing of 65bp based on an interest margin of 51bp over Tibor.

The syndication effort raised ¥19bn, and introduced more first-time lenders to the Reliance name, meeting one of the group’s key funding objectives. The number of regional Japanese banks participating in Reliance loans has risen steadily, from four in 2014 to 18 in 2018, across both the US dollar and yen deals.

If the breadth of support for the Samurai loan was impressive, it was nothing compared to Reliance Industries’ US$2.63bn refinancing. The deal started life with 17 mandated leads upon signing in July, added five more in senior syndication and another 22 in general. In total, the syndication raised over US$910m, another record for Reliance.

Commitments came from a dozen Japanese banks, 10 Taiwanese and a broad mix of others as far afield as Brunei and Mauritius.

The 17 senior mandated lead arrangers and bookrunners were ANZ, Bank of America Merrill Lynch, Barclays, BNP Paribas, BNS Asia, Citigroup, Credit Agricole CIB, DBS Bank, First Abu Dhabi Bank, HSBC, Mizuho Bank, MUFG, Societe Generale, Standard Chartered, Sumitomo Mitsui Banking Corp, United Overseas Bank and Westpac Banking Corp.

The deal comprises a US$187m two-year and 11-month bullet loan tranche A, which was not syndicated, a US$966m three-year amortising tranche B and a US$1.48bn four-year and 11-month amortising tranche C. The interest margin for tranches A and B is 69bp over Libor, while tranche C’s margin is 90bp over Libor.

Lenders joining as lead arrangers were offered a top-level all-in pricing of 91.5bp or 111bp via participation fees of 62.8bp or 92.2bp, respectively, for tranches B and C.

Reliance also set records in the export credit market to finance imports from South Korea and Italy. The K-Sure covered facility, with a tenor of 10 years and nine months, was split between US$825m and €150m tranches and is the Korean ECA’s biggest deal in India. ANZ and HSBC were ECA coordinators. With 95% of principal and interest guaranteed and a low premium thanks to Reliance’s strong credit rating, the deal gave Jio a cost-effective way of financing imports from Samsung Electronics and Ace Technologies.

Reliance went a step further in Italy, signing a US$340m and €136m 10-year loan that marked its first “untied” facility from government agency SACE. Rather than being linked to specific purchases of Italian goods or services, the financing is based on potential future engagement of Italian vendors, and comes with a commitment to matching events with Italian companies across Reliance’s procurement chain – potentially including fashion and luxury goods under the expanding Reliance Retail division.

In the Indian rupee market, where Reliance’s super-sovereign international credit rating counts for little, the group embraced a move towards larger, public offerings and raised a total of Rs160bn during the year. Timing, again, was crucial, and Reliance did well to avoid the turmoil that set in following a slump in the rupee and panic in the non-bank financing sector over the summer.

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Issuer of the Year