"The final price got tightened to 5.875 per cent in dollar terms from the initial pricing guidance of 6 per cent, thereby making RIL the first off the block globally to raise funds through a perpetual bond issue with no subordinated equity or any buyback option, below 6 per cent," an RIL official told PTI late this evening.
Perpetual bonds are those with no maturity date, therefore, they may be treated as equity, and not as debt.
Perpetual bonds pay coupons forever, and the issuer does not have any obligation to redeem them. Their cash flows are, therefore, those of perpetuity.
The company official also said this is the first senior long-rated bond issuance by a domestic company and that globally only five companies have issued perpetual debt but all of them are paying more than 6 per cent coupon.
The only other domestic company to issue a perpetual bond is Tata Power (late last year). But that was a hybrid issued by its offshore vehicle and not the parent.
However, the official said the issue has a call option to buy back the debt in the fifth year, apart from a similar option before every interest payment. But significantly, the issue does not have any subordinated equity issue option or credit payment option, he claimed.
This is the fifth time that the Mukesh Ambani-led company has hit global markets to raise long-term debt. So far this fiscal, the oil and gas behemoth has raised $4 billion from overseas, including $1.5 billion last October by its US subsidiary in a 10-year money.
However, the current debt is raised by the parent company RIL, the official added.