MUMBAI: Mukesh Ambani-led Reliance Jio, an emerging telecom giant, has hit the domestic corporate bond market marking it the largest transaction in this financial year.
The top-rated company has raised Rs 2,500 crore from Axis Bank, the sole arranger for the five-year money, two people familiar with the matter told ET. The deal has been concluded this week.
A spokesperson from Reliance Industries confirmed the matter. “We have raised the money,” the person said.
The bonds have offered a rate of 8%, and the proceeds would be used for its proposed expansion.
"This (Reliance Jio) is the largest deal under the electronic bidding platform this year," said Shashikant Rathi, head treasury at Axis Bank (the sole arranger), confirming the matter. "The top-rated company raises money to support its expansion.”
Under the new regulatory norms beginning this financial year, every borrower has to go through electronic bidding platforms, available in exchanges unlike the practice of personal negotiations with investment bankers.
The company is on a fund raising spree as it aims to expand its telecom empire. Jio spent about Rs 7,000 crore as capex in the December quarter and has said it expects capex levels to be similar in the ongoing March quarter.
Jio has also tapped the yield-hungry Japanese loan market to help expand its telecom empire. It raised $500 million through a syndicated Samurai loan from three Japanese banks, including Bank of Tokyo-Mitsubishi UFJ (MUFG), Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho Bank, ET reported on Thursday. The company is seeking to diversify its borrowing base.
Last month, RILs board approved raising Rs 20,000 crore through debt in tranches. Analysts said the funds could be used to finance the capital expenditure requirements of Jio, including paying for the wireless assets of Reliance Communications bought under a deal signed late December. Also, Reliance Industries is seeking to enhance its contents library.
“Our network continues to rapidly expand across the country. And in the next 12 months, Jio services will cover 99% of our countrys population,” Mukesh Ambani said last year during a speech delivered at the annual general meeting.
Having invested more than Rs 2,00,000 crore and signing up about 175 million subscribers, Jio is also expanding its 4G network rapidly and aims to double its telecom-tower infrastructure to reach the entire population by this year end.
Jios capex needs include about Rs 25,000 crore to be paid to Reliance Communications for wireless assets, including spectrum, towers, optic fibre and switching nodes.
During 2017-18, companies sold bonds worth Rs 5.75 lakh crore, compared with about Rs 6.41 lakh crore a year earlier. This is the first time since the NDA government came to power bond sales have fallen by about 10% year-on-year in FY18, reflecting weak investor appetite.
With the Reliance Jio bond-sale, it is now expected that this year may be better for corporate bond market, dealers said.
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