Corporate bonds

Reliance Jio seeks to raise Rs 8,000 crore through corporate bonds

India’s leading telecommunications company is seeking to raise Rs 8,000 crore through corporate bonds. Reliance Jio Infocomm will sell corporate bonds in the local market next week to raise funds, The Economic Times reported. The corpus generated from the bonds will be used to repay dues the company accrued from buying spectrum in the 2014 and 2015 auctions, people with knowledge of the matter told ET.

The bonds are expected to have a term of five years and three years or two years, offering an interest rate of approximately 6.2% and 5.35%. Lenders like Axis Bank, ICICI Bank, HDFC Bank and State Bank of India are being considered by the company to raise Rs 5,000 crore via five-year bonds, while shorter bonds are offered to top mutual funds to acquire another Rs 3,000 crore.

While the Mukesh Ambani-owned company had settled its dues for spectrum purchases made in 2016, the company still owed around Rs 15,000-16,000 crore including interest on the remaining partial dues from the 2015 spectrum auction and 2014.

The company at the time purchased a total of Rs 11,054 crore of spectrum in 2014, and additional spectrum worth Rs 10,077 crore in 2015.

Unlike its main rivals Vodafone Idea and Bharti Airtel, Jio Infocomm has not taken up the recently announced postponement options that the Center is offering to the beleaguered sector. The government has offered telecom companies the options of a four-year spectrum moratorium and Adjusted Gross Revenue (AGR) payments.

But while Airtel and Vi are struggling with their finances, Jio Infocomm is in much better financial health and hopes to settle dues via the corporate bond route as their interest rates are well below the 10% rate. that the government charges on the moratorium.

Warning: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

(Edited by : Shoma Bhattacharjee)