Reliance Industries Ltd. and its telecom subsidiary Jio Infocomm recently received foreign currency loans totaling $5 billion, the largest syndicated loan in India’s corporate history.
In the last week of March, Reliance raised $3 billion from 55 banks, while Jio secured an additional $2 billion in debt from 18 institutions. While Jio will use the money for nationwide deployment of its 5G network, Reliance will primarily use it for capital expenditure. Both businesses will receive an add-on loan of $2 billion, which is expected to be completed by the end of April.
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The terms of the new $2 billion loan are the same as the loan agreement entered into on March 31 with 55 lenders, 40 of whom participated during the two phases of syndication. The syndicate for the $3 billion loan is expected to include 18 banks, including 15 senior MLABs as well as other banks joining at the senior stage.
The market reacted strongly to this syndicated loan, and more than two dozen Taiwanese banks as well as international giant lenders such as HSBC, Bank of America, MUFG, Citi, SMBC, Mizuho and Crédit Agricole joined in.
The report claimed that the explosive response was expected given the $3 billion in senior tranche lending momentum by the time it was released in broad syndication in mid-January.
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Given that this is essentially an unanticipated greenshoe option, the size of the add-on is two-thirds of the initial $3 billion loan, which is extremely substantial and rare in Asian debt markets.
The very positive market response and continued enthusiasm from lenders for the blue-chip firm led to the decision to fund an additional $2 billion, which has not participated in the syndicated loan market until recently.