Reliance Industries Ltd. and its telecom subsidiary Jio Infocomm have recently secured a total of $5 billion in foreign currency loans, marking the largest syndicated loan in India's corporate history.
In the final week of March, Reliance raised $3 billion from 55 banks, while Jio obtained an extra $2 billion in credit from 18 institutions. Although Jio will use the money to finance the nationwide deployment of its 5G network, Reliance will primarily use it for capital expenditures. The two businesses will each receive a $2 billion add-on loan, which is anticipated to be completed by the end of April.
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The conditions of the new $2 billion loan are the same as those of the loan agreement inked on March 31 with 55 lenders, 40 of whom participated during two stages of syndication. The syndicate for the $3 billion loan is expected to comprise of 18 banks, including the 15 senior MLABs along with other banks joining the senior phase.
The market reacted strongly to this syndicated loan, and over two dozen Taiwanese banks as well as international behemoths like HSBC, Bank of America, MUFG, Citi, SMBC, Mizuho, and Credit Agricole joined as lenders.
Reports claimed that the blowout reaction was expected given the momentum the $3 billion in borrowings had built up in the senior phase by the time it was released into wide syndication in mid-January.
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Given that it is essentially an unexpected greenshoe option, the add-on's size is two-thirds of the initial $3 billion loan, which is extremely substantial and rare in Asian loan markets.
The decision to fund an additional $2 billion was made due to the market's very positive response and lenders' continued enthusiasm for the blue-chip firm, which has not participated in the syndicated loan market recently.
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