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RIL group raises over Rs 5,100 crore via bonds and CPs

Dealersa said that domestic bond sale Friday, Mukesh Ambani who has been leding Reliance Industries Ltd (RIL) has raised a total corpus Rs 2,795 crore in taking advantage of a market flush with liquidity to reduce borrowing costs. On April 17, this follows Rs 8,500 crore it raised with the help of the same route. Dealers stated that on Friday, the RILNSE 3.36 % group collectively raised Rs 2,325 crore via short-term commercial paper (CP) and different other money market instruments.

The five-year bonds which were sold on Friday provided 7.4 per cent, which is 150 basis points highers in comparison to maturity government papers. Bond tarders find it at reasonable price, showing the cut in borrowing costs because of the emergency action by the Reserve Bank of India on March 27 to cope with the effects of the Covid-19 pandemic. Dealers said that if  RIL  had raised the money before March 27, the company would have had to offer at least 100-120 basis points more. A basis point is 0.01 percentage .

Axis Bank, Yes Bank, ICICI Bank and SBI Caps have likely purchased the bonds on Friday. Some investors might look forward to sell their  debt in the secondary market, they said, adding that Axis Bank could have beenone of the  the largest investor in the bond sale. RIL did not reply to ET’s queries. Individual investors could not be contacted immediately for comment.

The RBI said on March 27 it would lend as much as Rs 1 lakh crore under Targeted Long Term Repo Operations  to lower out the yields in the secondary market and invest in primary issues to help spark credit growth and revive the economy. But the RBI’s reverse repo window that now earns a quarter percentage point lower after it was cut to 3.75 per cent, banks have been parking more than Rs 7 lakh crore daily reflecting lenders’ risk aversion and their preference for safe havens.

A senior executive who was involved in the company’s fund raising plans said that the banks are now planning to seek safe investment bets as they have turned risk averse amid the economic crisis.

Earlier this month, brokerage Morgan Stanley said that RIL’s net debt will fall even if energy and retail demand struggles for six months. The brokerage said that net debt might not decline if asset sales are pushed out, but it still might not rise in FY21. Goldman Sachs said that concerns over the balance sheet and free cash flow were overdone.

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