Reliance Communications (RCom) has raised $300 million through dollar-denominated bond issue at a coupon rate of 6.5%, said bond arrangers. The company’s debut offshore bond issue has a tenure of five-and-a-half years, they added.
“There were hundred-plus investors spanning across Asia, Europe and the West Asia. This is the first Indian telecom company to raise funds through the overseas bond market which would be used in India,” said a bond arranger close to the development.
Moody’s Investors Service had assigned a “Ba3” rating on the Reliance Communications proposed dollar-denominated senior secured notes. “The proceeds from the issue will be used to meet capital expenditure or any other permissible end-use as prescribed by the Reserve Bank of India,” Moody’s had said in a report. Reliance Communications is returning to the offshore bond market after it withdrew plans to issue bonds late last year. DBS Bank and Standard Chartered were the joint book-runners for the bond issue for which roadshows were held in the previous week, according to bond arrangers.
“I think it’s very welcoming to see that sub-investment grade companies are being able to raise funds to be used onshore because most of the other such companies which have raised funds have used the proceeds overseas,” the source said. This will pave the way for further transaction for the infrastructure sector, he added.
This is the third high yielding issue by an Indian company in the offshore market in 2015. Delhi International Airport (DIAL) and Lodha Developers had also issued dollar-denominated bonds earlier this year at 6.125% and 12%, respectively.
The Moody’s report had indicated cash flow from operations will not be sufficient to meet the company’s funding needs, including capex and spectrum payment, over the next 12-18 months. It had also pointed out that in the absence of the asset sales, the company will need to raise about R5,000-6,000 crore, including the proposed bond issuance proceeds, over the next 12 months, but given the company’s banking relationships the refinancing risk may not be substantial.
So far, Indian companies have managed to raise nearly $4 billion through offshore bond issues in 2015. Companies had raised a record $18.6 billion through offshore bond issues in 2014 and many bankers believe this figure may cross $20 billion this year.
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