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Reliance Plans $1 Billion Local Currency Bond Sale Amidst Tightening Monetary Policy
- •Reliance Industries Ltd. plans to raise up to Rs 10,000 crore ($1 billion) through local-currency bonds as early as next week, marking its second debt offering this month.
- •The company aims to issue AAA-rated, 10-year notes with a potential coupon of 7.90%, slightly below the average yield for top-rated 10-year corporate bonds.
- •This move comes as the Reserve Bank of India is expected to tighten monetary policy later this year due to rising inflation risks from high oil prices and efforts to reduce banking system liquidity.
- •Surplus liquidity in banks has significantly decreased, and the average yield on top-rated 10-year corporate bonds is poised for its biggest monthly gain in at least three years.
- •Other major companies like Adani Airport Holdings Ltd. and JSW Energy Ltd. are also seeking bids in the onshore bond market.
Key Questions Answered
Mukesh Ambani’s Reliance Industries Ltd. plans to raise as much as Rs 10,000 crore ($1 billion) through local-currency bonds as early as next week. The company aims to issue AAA rated notes due in 10 years with a potential coupon of 7.90%.
Many issuers are considering bond offerings amid expectations that the Reserve Bank of India may tighten monetary policy later this year as inflation risks mount due to high oil prices. The monetary authority is also taking aggressive measures to reduce surplus banking liquidity to curb these inflationary pressures.
Billionaire Gautam Adani’s Adani Airport Holdings Ltd. and tycoon Sajjan Jindal’s JSW Energy Ltd. are seeking bids in the onshore bond market. Adani Airport is seeking up to 10 billion rupees in three-year notes, while JSW Energy aims to raise up to 5 billion rupees in seven-year bonds.
