Reliance Industries Ltd. (RIL), owner of the world’s largest oil-refining complex, hired banks to help arrange $1.5 billion of loans, according to three people familiar with the matter.
The facility will be split into a $1 billion, five-year part and a $500 million, six-year portion, the people said, asking not to be identified because the details are private. The loan is expected to be marketed to a wider group of banks in syndication in early July, the people said.
Mumbai-based Reliance is spending $8 billion to increase its petrochemical capacity, betting Indian demand for materials used to make plastics and polyester will help counter weaker global fuel sales. That’s part of an $18 billion investment plan aimed at doubling operating profit over the next five years as outlined by billionaire Chairman Mukesh Ambani at the company’s shareholder meeting in Mumbai earlier this month.
Tushar Pania, a Mumbai-based company spokesman, wasn’t available to comment on the financing when called at his office today.
Reliance is offering to pay a margin of about 250 basis points more than the London interbank offered rate, another person familiar with the matter said earlier this month.
The company signed a 13-year loan, equivalent to $2 billion, backed by credit insurer Euler Hermes SA (ELE) with nine banks in May, the largest such borrowing by India’s biggest energy company since May 2007, according to data compiled by Bloomberg.
The cost of insuring Reliance’s bonds against non-payment using credit-default swaps has fallen 78 basis points this year to 322.5 on June 28, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Lenders hired for the $1.5 billion facility include Australia & New Zealand Banking Group Ltd., Bank of America Corp., Barclays Plc, Bank of Tokyo-Mitsubishi UFJ Ltd., HSBC Holdings Plc, Mizuho Corporate Bank Ltd., Royal Bank of Scotland Group Plc, Sumitomo Mitsui Banking Corp., Westpac Banking Corp., Bank of Nova Scotia, Credit Agricole SA, DBS Bank Ltd., DNB ASA, Standard Chartered Plc, National Australia Bank Ltd. and State Bank of India, the people said today.
All banks have committed $60 million to the $1 billion facility except SMBC, which committed the equivalent of $60 million in yen and State Bank of India, which pledged $100 million, one of the people said today.
For the $500 million part, Bank of Tokyo-Mitsubishi UFJ, Mizhuo and Standard Chartered committed $40 million each, SMBC pledged the equivalent of $40 million in yen and State Bank of India pledged $340 million, the person said.
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