Reliance Industries said its $1 billion (Rs 4,970 crore) long term (10 year) bond in the nature of notes issued by its wholly owned subsidiary Reliance Holdings US, has been oversubscribed by eight times. This is the first corporate bond issued from India in calendar 2012 and evoked an order book of more than $7.8 billion.

The transaction is the largest high-grade private corporate issuance in the oil and gas sector from Asia including Japan and Australia and the emerging markets in the last 12 months, the company said in a filing to the Bombay Stock Exchange.

The dollar denominated, senior unsecured notes were issued by Reliance Holding US, which indirectly owns all of Reliance Holding, has fully and unconditionally guaranteed the notes that have been priced at 345 basis points over the 10-year US treasury note, and will yield 5.468 per cent per annum.

V Srikanth, joint chief financial officer at Reliance said in a filing to the stock exchange, “There was strong interest shown by high quality global investors in RIL’s credit. Also, the transaction was well executed despite the short time-window and a volatile global environment.”

The net proceeds from the issuance would be deployed to fund RIL’s ongoing capital expenditure and to refinance short-term debt incurred in the shale gas business, and for general corporate purposes, said a press release by international credit rating agency Standard & Poor’s. RIL has so far made $3 billion worth investments in shale gas in US, via exclusive joint ventures with US based Chevron, Carrizo and Pioneer.

Nearly 400 investor accounts in Asia, Europe and the United States participated in the transaction, said an RIL statement. In terms of geographic distribution, the notes were distributed 31 per cent in Asia, 17 per cent in Europe and 52 per cent in the United States. The notes were distributed in the following manner: 65 per cent to fund managers, 15 per cent to insurance funds, 10 per cent to banks, 5 per cent to private banks and 5 per cent to government agencies, the statement added.

Standard & Poor’s ratings services on Thursday assigned a ‘BBB’ (investment grade) long-term issue rating to the RIL bonds. S&P said some weaknesses such as RIL’s vulnerability to the cyclical nature of its industries and commodity prices; its exposure to India’s regulatory risks, declining gas production from KG D6; RIL’s aggressive growth strategy were weighing on its credit rating. “We expect RIL to maintain its strong financial ratios in the fiscal year ending March 31, 2012,” S&P however added.

Bank of America, Merrill Lynch, Barclays Capital, Citigroup Global Markets, HSBC and UBS Singapore acted as joint book runners and lead managers to the notes offering.

Rajiv Nayar, managing director and head of capital markets origination at Citi India said, “The Reliance bond has been priced at a very attractive level with no new issue concession for the first time in the last six months. The notes are rated BAA2 by Moody’s and BBB by S&P. We generated a very high quality order book, which included high quality emerging market investors as well as several blue chip traditional high grade investors which typically only prefer developed market assets.”

Meanwhile on Friday, RIL said one of the crude trains at Jamnagar complex was shut down on February 10, 2012 for undertaking planned maintenance and inspection activities. “This opportunity is being taken for replacement of catalyst and implementation of productivity improvement measures in some of the secondary processing units. The shutdown is expected end in the first week of March,” the company told the BSE.

vikassrivastav

@mydigitalfc.com