banks: Ten more banks set to join syndication for Reliance Industries Ltd’s $3 billion loan

At least 10 more lenders are set to join the third leg of the syndication of $3 billion loans to Reliance Industries Ltd and Reliance Jio Infocomm, in what is turning out to be one of the most sought-after credit deals out of India in recent times.

The fundraising, the largest through syndicated term loans by an Indian corporate house in at least five years, is set to close this month after months of negotiations, bankers said.

When the syndication is complete, at least three dozen banks would be owning the loan, they said. “Banks have already firmed up plans and are just completing the formalities for this loan which will be closed in the next few days,” said a person familiar with the matter. “The demand has been very strong with banks wanting to join even at a lower fee and late in the process, indicating that highly rated loans are much valued in such times of uncertainty.”

Initially, 15 banks, including Citibank, Bank of America, BNP Paribas, HSBC, Standard Chartered and State Bank of India, had signed up to be the lead underwriters for the dual-currency dollar and yen loan. They were later joined by 10 more, such as Barclays, JP Morgan, ING Bank, Bank of India, Bank of Taiwan and Sumitomo Mitsui Trust Bank.

These lenders had subscribed to $1.3 billion of the total $3 billion of loans in the sub-underwriting stage in January. This is now being followed by demand for another subscription of about $1.5 billion in the final syndication, bankers said.

More Asian lenders are expected to join in the final syndication for the five-year external commercial borrowing, they said.

Emails sent to the spokespeople for RIL, BNP Paribas, SBI and Bank of America did not elicit any response till press time Sunday. Citibank, HSBC and Standard Chartered declined to comment, while other banks could not be immediately reached.The loan proceeds are to fund Reliance Industries’ capital expenditure and the 5G expansion of Jio, ET reported in its October 10, 2022 edition.

The loans have been priced at 150 basis points, or 1.5 percentage point, above the Secured Overnight Financing Rate (SOFR), for RIL and a little higher at 158 basis points for Jio, said another person aware of the transaction. SOFR is a global rate gauge.

RIL’s low leverage
“Banks have been willing to back this loan right from the underwriting stage because of the low leverage of RIL and the dominance of Jio in the local telecom market. The crowd of banks even in the sub-underwriting and the final syndication makes this trade one of the most successful out of India,” the person said.

Japanese lenders Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp are among the banks which are funding the yen portion of the loan, estimated to be between $300 million and $400 million, the people familiar with the deal said.

“There are other Asian banks also lining up for the final syndication with Mauritius-based AFRAsia, Taiwan’s First Commercial and Esun Commercial and Korea’s KEB Hana among the banks to join the deal. RIL has yet to draw down on the loan and is likely to do that on March 20. The book is likely to be closed before the end of month,” said the second person cited above.