Moody’s assigns Baa2 rating to Reliance’s proposed dollar-denominated bonds

The rating agency Moody’s Investors Service on Tuesday awarded a “Baa2” rating with a stable outlook to the proposed dollar-denominated bonds to be issued by Reliance Industries Ltd (RIL).

RIL said on Saturday that its board had approved raising up to $ 5 billion in one or more tranches by issuing unsecured US dollar-denominated fixed-rate banknotes. Proceeds from the issuance of banknotes will be used primarily to refinance existing loans, the statement said.

“Ril’s Baa2 ratings reflect the company’s large and dominant market position in various businesses, strong records of its management in execution and our expectations that its credit metrics will remain firmly positioned for its Baa2 rating, despite planned investments in clean energy and other business segments.” , said Sweta Patodia, an analyst at Moody’s.

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The company’s high dependence on the Indian economy through its digital services and retail business limits its rating to one degree above India’s sovereign rating, she added.

The evaluation agency says RIL’s recent announcement of tariff increases for its digital services business is positive for the telecommunications industry, while mitigating pandemic-related disruptions will support oil and gas demand as well as increase consumer spending.

“These trends are well known for different business segments of RIL and will keep earnings strong in the next 12-18 months,” it said.

The stable outlook reflects Moody’s expectations that the company’s earnings will continue to improve over the next 12-18 months in all business segments, so its credit metrics will remain firmly in place for its rating, it added.

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