Reliance Industries Ltd. (RIL), owner of the world’s largest oil-refining complex, approached banks seeking a five-year loan of about $1 billion, according to three people familiar with the matter.
The Mumbai-based company, controlled by billionaire Mukesh Ambani, has asked banks to respond with proposed term sheets by May 30, the people said, asking not to be identified because the details are private. Proceeds will be used for capital expenditure, the people said.
Tushar Pania, a spokesman at Reliance Industries, didn’t immediately respond to an e-mail and didn’t answer three calls to his mobile phone seeking comment on the financing.
Reliance signed a 13-year loan equivalent to $2 billion backed by credit insurer Euler Hermes SA (ELE) with nine banks, it said earlier this month. That’s the largest such borrowing by India’s biggest energy company since May 2007 as credit investors’ confidence in the group surges, according to data compiled by Bloomberg.
The cost of insuring Reliance’s bonds for a year against nonpayment using credit-default swaps tumbled 144 basis points this year to 133.7 on May 18, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Reliance is planning an $8 billion expansion of its petrochemicals business, the most since completing its second oil refinery in 2008. It reported that cash surpassed debt in an April 20 statement.
Banks preparing to commit about $100 million to the new $1 billion facility are considering offering Reliance pricing of about mid-200 basis points more than the London interbank offered rate, one of the people said today.
Reliance has a $1.5 billion loan that matures May 2016, according to data compiled by Bloomberg. The facility, signed in December 2010, pays a margin of as much as 200 basis points more than Libor, the data show.
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