Initially the BBB/Baa2 rated deal market to investors at an indicative guidance set at yen mid-swaps plus 90bp to 95bp. The deal was priced at the tight end of guidance at 90bp over yen-swaps, on a coupon of 2.86%. Fees were undisclosed.
ABN AMRO, Deutsche Bank and Nikko Citigroup were joint bookrunners on the deal.
Roadshows were held in Hong Kong on March 20, Singapore on the 21 and London on the 22nd.
The order book was kept tight to only 20 accounts and was closed at Ñ25 billion, an oversubscription ratio just under 1.5-times. Geographically, the book was sold 40% to Asian investors, 30% to Japanese investors and 30% went to European investors. In terms of account type, banks bought the lionÆs share at 75%, fund managers were allocated 13% and insurers claimed 10%.
Reliance will use the proceeds from the deal as capex for further expansion of its oil refining and chemical capacity. IndiaÆs largest private sector company plans to spend $6 billion on capital expenditure in the next three to four years.
In its rating report, S&P says, ôWe view RelianceÆs capex plan with some concern, given the potential softening in the petrochemical cycle, reduced demand for refined products, and uncertainties related to the companyÆs upstream gas business. Additionally, lower-than-expected cashflows for funding a part of the capex could mean still higher borrowings, which would weaken RelianceÆs credit protection measures. Nevertheless, the companyÆs current financial position, strong liquidity, and access to financial resources mitigate some of these risks, The rating reflects its globally competitive position in refining and petrochemicals, its divestment of capital-intensive non-core telecom and power businesses, and its overall moderate financial profile.ö
