RIL looks to borrow $2.7 b in forex loans to repay debt

The cash-rich Reliance Industries (RIL), which also is one of the biggest forex loan borrowers in the country, is set to tap the foreign debt market to raise $2.7 billion to refinance its existing high cost debt. As of the June 2018 quarter, the Mukesh Ambani-led company had an outstanding debt of Rs 2,42,116 crore, which rose from Rs 2,18,763 crore from March 2018, while cash in hand marginally rose to Rs 79,492 crore.

The company had spent around Rs 22,000 crore in capex during the quarter mostly into the still cash-burning telecom venture, and reported a net income of Rs 9,459 crore.

Its outstanding debt has been rising as its fledgling telecom business continues to drain cash. "We are planning to raise $2.7 billion in forex debt through the course of the fiscal 2019. The money will be raised in multiple tranches and will be used to refinance some of our existing high cost forex debt," a senior company official said over the weekend refusing to reveal more information.

More than half of RIL’s around $34 billion debt is due for repayment by 2022, while around $13 billion is maturing from 2018 through 2020. Most of the outstanding debt is denominated in foreign currencies. RIL has sought shareholders’ approval to issue redeemable nonconvertible debentures at its annual general meeting (AGM) on July 5, it said in its annual report. Due to the high rating at BBB+ (by S&P Global Ratings) which is two notches higher than the sovereign rating, RIL can raise cheaper funds. Moody’s has a Baa2 rating on the company, a notch above the government’s rating. RIL is the only private sector

company in the country that has issued perpetual bonds to foreign investors a few years back. The only other domestic entity to tap the perpetual bond market is the state-run State Bank of India.

According to investment bankers, RIL’s repayments from 2018 through 2020 will be its biggest for any threeyear period in the past and include about $8.14 billion term loans, $3.52 billion bonds and a $300 million revolver loan. It also has about $1.65 billion in interest payments.