Reliance Industries is increasing the size of its planned asset-backed securities (ABS) issue to ₹21,000 crore — up from an earlier target of ₹18,000 crore — due to strong demand from investors. The securities are being offered at a coupon rate of approximately 7.75%.
Key Details
| Feature | Details |
|---|---|
| Issuer | Reliance Industries Limited |
| Instrument | Asset-Backed Securities (ABS) backed by receivables from its operating businesses. |
| Amount | ₹21,000 crore (raised from earlier ₹18,000 crore due to high demand) |
| Coupon Rate | ~7.75% per annum |
| Tenor / Maturity | Around 4 years |
| Arranger | Barclays is acting as sole arranger for the transaction. |
| Expected Investors | Mutual funds like ICICI Prudential, other domestic asset managers, etc. |
What This Means
- Strenghtened Demand: The jump in issue size (from ₹18,000 cr to ₹21,000 cr) indicates strong investor appetite
- Cost of Capital: A coupon of ~7.75% for four years suggests Reliance can tap into debt markets at a reasonably competitive rate, especially for asset-backed securities.
- Cash Flow Monetization: By using receivables from its businesses as backing for these securities, Reliance is effectively monetizing its operational cash flows. This helps in raising capital without increasing secured or unsecured traditional debt.
- Investor Diversification: The issue is likely to attract fixed-income investors seeking shorter tenor paper and stable yields. The Economic Times
Risks / Points to Watch
- Credit & Receivables Quality: Performance of these securities depends heavily on the underlying receivables. Delays, defaults, or deterioration in those could affect returns.
- Interest Rate Environment: If interest rates rise sharply, newer issues might demand higher coupons, reducing the attractiveness of these securities in secondary markets.
- Regulatory/Treasury Risk: ABS structures entail legal and operational risks — e.g., how the securitization trust is structured, how cash flows are collected, etc.
