Indian borrowers are increasingly turning to banks for a cheaper source of funds, as the international bond market remains tight amid slowing global economic outlook. The deal will add to more than $22.5 billion of syndicated loans borrowers in India have raised this year to buy assets, boost production, and refinance debt, data compiled by Bloomberg show.
"This loan again underlines that despite market volatility, Indian companies have ready access to the international debt markets to support their strategic objectives," Mumbai-based Pramit Jhaveri, head of Citigroup Inc.'s investment banking in India, said in an e-mail to Bloomberg News. "This loan highlights again that there is continued strong interest for high quality issuers and borrowers from the international banking community in supporting corporate India."
Reliance hired banks including ABN Amro Holding NV, Bank of Tokyo-Mitsubishi UFJ Ltd, Banco Bilbao Vizcaya Argentaria SA, Bayerische Landesbank, BNP Paribas SA, Calyon, Citigroup, DBS Group Holdings Ltd, Fortis, HSBC Holdings Plc and ING Groep NV.
Other arrangers include Mashreqbank PSC, Natixis SA, Norddeutsche Landesbank Girozentrale AG, Rabobank Nederland NV, Sumitomo Mitsui Banking Corp, WestLB AG, Bank of Nova Scotia, and Kreditanstalt fuer Wiederaufbau, according to the e-mail.
Investors ask for an average yield of 7.9% to buy Indian companies' dollar bonds, JPMorgan Chase & Co's Asia Credit Index shows. Credit-default swaps on Reliance rose 5 basis points to 225 at 4:23 pm in Singapore, according to Barclays Capital's prices. That means it costs $5,000 more a year to protect $10 million of Reliance debt from default for five years.
India now accounts for almost 20% of the syndicated lending market in Asia outside of Japan.