MUMBAI: Mukesh Ambani's Reliance Industries is in talks with banks to raise up to $ 2.5 billion in foreign market lending, thus accelerating investment in telecommunications and retailing, have indicated four people close to the file.
RIL is negotiating with more than a dozen banks to arrange the loan in single or multiple tranches, as it deploys the fiber optic network and sets up more retail stores, said the people who did not want to be identified. This loan involves refinancing the existing offshore debt, lifted about two and a half years ago, and reducing the average cost of borrowing or longer maturities, said one of the people mentioned above.
Loans should have a price between 100 and 125 basis points above the London Interbank Offered Rate (Libor), with a probable maturity of 3 to 5 years.
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<p> <strong> The Road Begins Soon <br /></strong> This is the price investors are demanding at this point, even though nothing has been finalized yet, they said. Road shows should start in a few weeks, said another person mentioned above. "As part of its ongoing liability management program, RIL continues to examine the possibilities of refinancing debt at very competitive financing rates," said a spokesman for RIL in response to questions from 39; AND.
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<p> Reliance, one of the top rated companies in India, has managed to raise debt and refinance with cheaper facilities in the past. The new fundraising comes after President Ambani told shareholders that he was going to further develop his telecommunication business.
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<p> "While India has become the world leader in mobile broadband … we are still lagging in fixed broadband," Mukesh Ambani told the recent shareholders meeting. "Fixed broadband on fiber optics is the future." Jio is determined to bring India into the top 5 fixed broadband. "
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<p> The oil conglomerate retail has invested more than Rs 2.5 lakh crore in the telecommunications industry in recent years to try to capture a significant share of the growing digital consumption – data to multimedia and Streaming movies and entertainment content on various platforms. He is also aggressively developing his retail business.
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<p> For the full fiscal year, the company can raise about 40,000 rupees, or $ 5.8 billion, in new loans, reported Bloomberg. As the company expands its network, its loans are growing steadily. His total debt has tripled in the last five years because he borrowed to fuel more than Rs 3.3 lakh crore to support his investment spending. The company has total loans of about Rs 2.2 lakh crore that is due in 2022, the data show Bloomberg.
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<p> Reliance's better than sovereign rating helped it increase its less expensive debt while investing cash reserves that reached 78,000 rupees last year. Other income represented approximately one-fifth of its pre-tax income in the 12 months ended March 31 – a large portion of this profit being realized by investing money.
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<p> RIL holds a BBB + credit rating from S & P Global Ratings, which is higher than India's sovereign rating. Reliance returned to the local currency bond market after an absence of more than seven years last year, raising Rs 20,000 crore via six bids between August and November. The conglomerate has rated some bonds maturing in three years or slightly more in the range of 6.78% to 7.07%.<br />
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