Reliance Jio to raise around Rs 5,700 crore through offshore loan

Reliance Jio is raising around $750 million (about Rs 5,700 crore) through an offshore syndicated loan to primarily fund future capex needs, two people with direct knowledge of the matter said.

The likes of Bank of America, Credit Agricole, HSBC, State Bank of India and three Japanese banks — MUFG, Mizuho and SMBC – are slated to syndicate the five-year offshore loan likely to be priced after adding 120-130 basis points over the Secured Overnight Financing Rate (SOFR) — a new global rate gauge, market sources said. Individual banks could not contacted immediately.

“The loan agreement may be signed this week itself,” said one of the persons cited above.

Jio, a unit of Mukesh Ambani-owned Reliance Industries, is likely to ink an agreement with its potential lenders this week, he added.

Earlier in January, Jio raised about Rs 8,000 crore by selling corporate bonds in local money markets to primarily clear a portion of past dues relating to spectrum purchases in the 2014 and 2015 auctions, it was reported.

Bankers aware of the development said Jio’s latest fundraise via an offshore loan will also underline global investor confidence in India’s telecom market leader, regardless of the troubled geopolitics in the aftermath of the Russian invasion of Ukraine.

Industry insiders say a chunk of the proceeds of Jio’s latest fundraise could be used for capex spends toward the first wave of 5G network rollouts, particularly in the urban markets.

Jio may also use a portion of the loan proceeds to refinance some short-term bridge loans raised earlier through commercial papers, another person with direct knowledge said. Some of these are maturing in June.

The government has been coaxing the regulator to send its 5G spectrum pricing recommendations by March-end so that it holds the sale in May. The government wants initial 5G rollouts by August 15.

Jio is expected to be the strongest participant in the upcoming 5G spectrum sale. But before that, Jio is also strengthening its 4G network to stave off a stiff challenge in the market from rival Bharti Airtel, as well as loss-making Vodafone Idea, which is trying to regain lost ground after a government relief package. Pehal News