Reliance Industries (RIL) has raised $1 billion (nearly Rs 5,000 crore) by selling foreign currency bonds to investors abroad through its arm, Reliance Holding USA. The bonds carry a coupon of 5.4 per cent, payable semi-annually and unconditionally guaranteed by RIL.

The transaction was subscribed nearly eight times. Nearly 400 accounts in Asia, Europe and America participated in the issue. Citigroup Global Markets, Bank of America Merrill Lynch, Barclays Capital, Hongkong & Shanghai Banking Corporation and UBS AG acted as joint book runners and lead managers to this issue. Reliance Holding USA will use the net proceeds to fund its ongoing capital expenditure, finance investments, refinance existing debts and for general corporate purposes. Analysts said since the funds raised in America would be used locally, there’s a natural hedge against currency fluctuations. Hence, RIL preferred to opt for the foreign currency bond issue instead of using its own reserves.

About 65 per cent of the bonds were distributed to fund managers, 15 per cent to insurance funds, 10 per cent to banks and five per cent each to private banks and government agencies. “The transaction was well executed, despite the short time window and a volatile global environment," said V Srikanth, joint chief financial officer at RIL.

This was the largest high-grade private corporate bond issuance in the oil and gas sector from Asia, including Japan and Australia and the emerging markets in the past 12 months, bankers said. “This transaction underlines huge global investor interest in RIL and sets a new benchmark for Indian companies in the global bond markets," said Ravi Kapoor, head of global banking at Citi India.

Bankers and industry analysts said the strength of RIL’s balance sheet aided the fund raising at a very low cost and it would benefit the company in the long run.

The transaction was priced with no new issue concession, at 345 basis points over the 10-year US treasury note, to yield 5.468 per cent.