Billionaire Mukesh Ambani's Reliance lines up $1 billion bond sale, its second in three weeks

Indian billionaire Mukesh Ambani's Reliance Industries is heading back to the bond market for about $1 billion, its second rupee debt sale in three weeks, as cheap local borrowing costs and a spike in U.S. Treasury yields make domestic funding the better deal for India's largest company.

The conglomerate plans to raise around 100 billion rupees ($1.04 billion) through 10-year notes at an annual coupon of 7.90%, four merchant bankers told Reuters on Thursday. Bids are expected next week or the week after. Reliance did not respond to a request for comment.

The pricing is tight. Bloomberg data put the average yield on top-rated 10-year Indian corporate bonds at 7.97% on Wednesday, so Reliance would be borrowing for a decade at a shade below the going rate for AAA issuers.

The timing is deliberate. "Ideally, the company would want to finish the borrowing before the central bank monetary policy decision on October 7," one banker said. India's benchmark 10-year government yield climbed above 7% this month as markets braced for the Reserve Bank of India to drain liquidity, and locking in a coupon before that meeting removes the risk of a repricing.

The first tranche landed two weeks ago: 120 billion rupees ($1.25 billion) of five-year paper at 7.47%, Reliance's first rupee bond since November 2023, when it raised 200 billion rupees in what was then the largest local-currency debt sale by an Indian non-financial company. Large private-sector banks arranged that deal and took part of it themselves, and bankers expect the same for the new one.

Together the two sales would put about $2.3 billion of fresh rupee debt on Reliance's books in a month and take its outstanding bonds to 540 billion rupees. Bankers said relatively benign local yields have made rupee funding cheaper than dollar debt, where rising Treasury yields have pushed up costs for emerging-market borrowers.

Reliance has not said what the money is for. The group is in the middle of a capital-heavy stretch across energy, its Jio telecom arm, retail and new energy, and its dollar bonds due 2027 and beyond mean refinancing is never far off. A rupee issue also sidesteps currency risk at a time when the rupee trades near 96 to the dollar.

The company's borrowing is small next to its balance sheet: Reliance is India's most valuable listed company, and Ambani's fortune, tied almost entirely to its shares, keeps him at the top of Asia's rich lists. What the two tranches show is a treasury reading the rate cycle and moving before it turns.