Reliance Industries (RIL) has raised $200 million through its dollar-denominated ‘Formosa’ bond issue, which bears a fixed interest rate of 5% per annum, according to a press release.
The ‘Regulation S’ bonds have primarily been issued to Taiwanese life insurance companies and are proposed to be listed on the Taipei stock exchange, it added. Formosa bonds are those which are issued in Taiwan in a currency other than the New Taiwan dollar.
According to the release, RIL’s bond issue is the first ever Formosa bond issuance by an energy company globally and the first such issuance out of India.
The company said the senior unsecured callable notes due 2035 will have an annual call option at par starting June 5, 2020, and the funds raised will be utilised for the company’s ongoing capital expenditure.
Deutsche Bank AG, Taipei Branch and HSBC Bank (Taiwan) acted as joint bookrunners and lead managers on the transaction, the release said.
Bond arrangers say that the Taiwan market is known for having an appetite for issuances with long tenures where an issuer has access to a very diversified investor base like the domestic life insurance companies.
Formosa bonds have an advantage over other category of bonds as an issuer can include a ‘call’ option in the issue at a very reasonable pricing, according to bond arrangers.
A call option provides the choice where an issuer can redeem the bond before its redemption date.
“Call options are also available on other category of bonds, but they come with a cost higher than what you could see here,” a bond arranger said.
This is the third overseas bond issue by RIL in 2015 after the company raised $1 billion in January and $750 million in February this year.
Overall, RIL has raised $1.95 billion through overseas bond issuances this year.
In 2015, Indian companies/banks have raised close to $5.5 billion through overseas bond issuances so far with many opting to tap the market at a time when the yields are conducive.
A few weeks back, two companies and a bank had issued bonds in the overseas market, raising $1.55 billion in three consecutive days.
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