Reliance eyes ₹10,000 crore bond sale at 7.90%

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Reliance Industries Limited ( !RELIANCE ) is reportedly planning to raise ₹10,000 crore through 10-year rupee-denominated bonds at a 7.90% annual coupon, according to bankers. What happened? The proposed issue follows Reliance's ₹12,000 crore five-year bond sale earlier this month at 7.47%. Bankers expect bids within the next two weeks, potentially before the RBI's October 7 policy decision. If completed, the latest issue would take Reliance's outstanding bonds to approximately ₹54,000 crore. Why does it matter? Domestic bond yields are currently relatively favourable compared with overseas borrowing costs. Raising rupee debt also avoids the direct currency exposure associated with dollar-denominated borrowing. The proposed 10-year maturity would provide Reliance with longer-term funding and reduce the need for frequent refinancing. My view The important point is how Reliance is managing its borrowing costs and debt maturity profile. The proposed 7.90% coupon would imply an annual interest expense of approximately ₹790 crore on ₹10,000 crore. However, additional borrowing should be assessed alongside its use of proceeds. Refinancing existing debt and funding new investments can have different implications for leverage and future cash flows. What I am watching next I would track the final coupon, subscription, use of proceeds and changes in net debt. The RBI's October 7 policy decision is another important event for domestic borrowing costs. No Recommendations Source: Business Standard / Reuters Disclosure: I, my entity, associates or relatives don't have any holding, position or other material interest in Reliance Industries Limited.