Moody’s allocate Baa2 rating to Reliance Industries Ltd bonds issue

Reliance last week announced that it aims to raise around USD 5 billion in foreign currency-denominated bonds and use the proceeds to relinquish existing borrowings.

Moody’s Investors Service on Monday assigned a Baa2 rating to the proffered USD-denominated senior unsecured bonds to be issued by Reliance Industries Limited (RIL) with a sturdy perspective.

Reliance last week announced that it aims to raise around USD 5 billion in foreign currency-denominated bonds and use the proceeds to relinquish existing borrowings. Moody’s Investors Service supply investors with credit ratings, risk analysis, and research for stocks, bonds, and government entities.

Moody’s Analytics develops software and tools that help capital markets with risk management, credit analysis, and economic research.

“RIL’s Baa2 ratings reflect the company’s large scale and dominant market position across its diverse businesses, its management’s strong execution track record and our expectation that its credit metrics will remain strongly positioned for its Baa2 rating, despite its planned investments in clean energy and other business segments,” Sweta Patodia, a Moody’s Analyst, said in the rating agency’s press statement.

The companies will share the areas of benefits in the sectors like refining and petrochemicals, digital services, and consumer retail segments. These three segments together generated around Rs 94,400 crore (USD 12.6 billion) or 86 per cent of RIL’s consolidated EBITDA for the 12 months ended September 30, 2021.

“At the same time, the Baa2 rating incorporates RIL’s exposure to the inherent volatility of refining and petrochemical margins, its single location refinery’s concentration risk and the execution risk from its diversification into consumer businesses. The rating also accommodates Moody’s expectation that RIL will use its financial flexibility to make growth-enhancing investments that will boost its business and geographical diversification”, A report released on Feb 3rd, 2015, by Moody’s investor’s service said.

Despite that, the investor’s company showcased that the RIL’s ratings can be upgraded only if the sovereign rating is upgraded because the company’s ratings are masked. The report later added that the RIL’s credit metrics are extremely strong for its sovereign-constrained rating, and only a very substantial depreciation in the credit metrics could put pressure on its credit.

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