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Reliance Petro in loan rush

Mumbai, Feb. 15: Mukesh Ambani-run Reliance Petroleum today raised a $1.5-billion term loan ' the largest in Indian corporate history ' to fund a 27-million-tonne refinery at Jamnagar in Gujarat that will cost $6 billion.

The $1.5-billion syndicated loan facility is the single largest limited recourse financing mandated in the Asian markets in recent years, excluding China, and the fourth-largest single mandate in Asia in the last five years, the company said in a statement. The funds were raised at an attractive rate of 135 basis points over Libor.

RPL had recently mandated 14 leading international and domestic banks that comprised ABN Amro Bank NV, Bank of America NA, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Calyon, Citigroup Global Markets Singapore Pte Ltd, DBS Bank Ltd, DZ BANK, ICICI Bank, Mizuho Corporate Bank Ltd, Standard Chartered Bank, State Bank of India, Sumitomo Mitsui Banking Corporation and The Hongkong and Shanghai Banking Corporation Ltd to arrange the syndicated loan.

“The facility will be used to finance the setting up of a new refinery having an installed capacity of approximately 27 million tonnes per annum (mtpa) and a 0.9 mtpa polypropylene complex. On a stand alone basis, the new refinery is expected to be the sixth largest at any single location in the world and, together with RIL’s existing 33 mtpa refinery at Jamnagar, this will be the largest concentration of refinery assets at a single location globally,” RPL said in a statement.

According to the subsidiary, the loan facility signalled the reopening of the project finance market in India which, in the last decade, has not witnessed significant risk participation by foreign banks. The fund raising will be the country’s largest ever offshore syndicated loan financing and the final maturity of 10 years represents the longest maturity for any corporate term debt issuance out of India.

RPL was of the view that the facility’s tenor of 10 years will open a new window for Indian companies since the maturity profile for the offshore syndicated loans has been largely restricted to 5-7 years.

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