RIL dollar bonds top PSU papers on returns chart

Mumbai: Returns on the foreign-currency bonds of Reliance Industries (RIL) exceeded those of even sovereign-backed papers in the first half of 2020 after India’s biggest company by all financial yardsticks lowered its debt through a record ten rounds of equity sale at Jio Platforms.The dollar-denominated ten-year bonds have rallied 5.1 per cent until June 16 this year compared with 1.7 per cent at IRFC and 0.9 per cent for NTPC bonds since the beginning of the year. RIL bonds, issued on August 26, 2015, will mature in mid-January 2026.“Reliance has been consistently the vanguard of the foreign currency bond market — not only for India but also for Asia,” said Rahul Banerjee, founder at BondEvalue. “Indian overseas paper has seen a sharp price rally, and the best names such as Reliance are up for the year. With S&P reaffirming India’s rating and outlook and Fed indicating low rates for a long time, the conditions are positive.”76436626RIL bonds are trading at a premium unlike many other Indian entities where bonds are still trading at discounts, despite sharp price rises. Yes Bank bonds returned 8 per cent this year, but they are trading at a discount.RIL’s creditworthiness remains at Baa2, a notch above New Delhi’s rank at Baa3 — the lowest in the investment grade category. This has enhanced RIL’s investment appeal with global money managers.RIL prices were at $106.8 versus $101.3 at the beginning of the year. But a sharper rally was evident since the conglomerate started raising money via stake sales beginning late April. The set of papers were trading almost on a par in the first week of May at $100.4 apiece.Another set of RIL bonds with 30-year maturity rallied 17.5 per cent since March 26, just days after India announced the lockdown.“The bonds have sharply rallied on the back of investors rerating the company’s credit metrics,” said Hemant Mishr, founder of Scube Fixed Income, a Singapore-based fund. “The substantial equity infusions from Facebook and a host of PE investors will help the company deleverage earlier than most investors expected.”Billionaire Mukesh Ambani’s oil-to-telecom conglomerate RIL has reportedly raised a record Rs 1.04 lakh crore in less than eight weeks from sale of minority stakes in its digital unit Jio Platforms to marquee investors.The recent measures will already cut RIL’s net debt by half by FY21, said Morgan Stanley.“Once the remaining asset monetisation comes to fruition, net debt could be near zero,” it said.

from Economic Times https://ift.tt/37ICCQe