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RCom raises $300m through Offshore Bonds at a coupon rate of 6.5%
Rahul Bakshi | 30 Apr 2015

Anil Ambani-owned Reliance Communications, one of the flagship companies of the Reliance Group, has raised $300 million by selling offshore bonds having a maturity period of five-and-a-half years at 6.5%. Roadshows were conducted overseas by investment bankers to promote the issuance. The fact that the issuance was oversubscribed three times is a proof of the zeal of the global investors. However, the company retained only $300 million.

Anil Ambani-owned Reliance Communications, one of the flagship companies of the Reliance Group, has raised $300 million by selling offshore bonds having a maturity period of five-and-a-half years at 6.5%. Roadshows were conducted overseas by investment bankers to promote the issuance. The fact that the issuance was oversubscribed three times is a proof of the zeal of the global investors. However, the company retained only $300 million.

An executive having direct knowledge of the matter told ET that the majority of the investors were from Asia, and 35% of subscribers were from UK and other parts of Europe. This executive did not wish to be named.
 
Falling below the investment grade, the securities are considered as high-yield or junk bonds carrying a rating of 'BB'.  The five year US Treasury bonds are currently yielding about 1.38%, which suggests that these bonds have been priced after adding about 512 basis points (BPS). A basis point, simply put, is one hundredth of a percentage point and is a unit used to depict the percentage change in the rate/value of a security.
 
"We wish to inform you that the company has launched, closed and priced the issue of Notes on April 27, 2015...the Notes will be listed on the Singapore Stock Exchange", stated the company in a late evening release.


 
This was the second such issuance this year after Delhi International Airport (P) Limited (DIAL) raised about $289 million through similar bonds with a seven-year maturity at 6.125%, in January.
According to global credit rating company Moody's, Reliance Communications is exposed to the risk of US dollar appreciation as nearly two-thirds of its total debt is in the US currency, against which it does not have a natural hedge. "Indian telecom operator Reliance Communications (RCOM, Ba3 stable), with about 66% of its total debt in US dollars, does not have significant mitigants in place either", Moody's commented.

Reference Link-

https://storify.com/rahul01/rcom-raises-dollar-300m-by-its-selling-offshore-bo

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