Rpl Cuts Ecb Size To $500 Million

Reliance Petroleum has pared the size of its foreign currency term loan issue from $750 million to $ 500 million. When contacted, a Reliance spokesman declined to comment on the issue.

Banking sources said the company is raising $500 million (instead of $750 million) and may opt for a second tranche of external commercial borrowings (ECBs) later in the year.

The facility will have a door-to-door life of 63 months and an average maturity of 60 months with a a step-up interest rate structure. The loan is being priced at 90 basis points over the six-month Libor for the first year.

It will be stepped up to 105 basis points over Libor for the second year while for the third, fourth and fifth years, the facility will be priced at 140 basis points over Libor. The six-month Libor is now pegged at 4.25 per cent. The average all-in cost for the facility will be below 6 per cent.

A clutch of seven foreign banks is managing the issue. The list of banks includes HSBC, ABN Amro, Solmon Smith Barney, Grindlays, BA Asia, Stanchart and Toronto Dominion. They have also fully underwritten the issue.

If RPL decides to go for a second tranche later this year, the cost of borrowing will be higher as all ECBs floated after June 1 will be subjected to withholding tax. The present issue of $500 million will not be subjected to withholding tax even if it hits the market later as the documentation is complete for the deal.

The company