India's largest private sector company Reliance Industries on January 21 returned to the US dollar bond market as it priced a US$1 billion offering, thus locking in long-term funding at an attractive cost.

The Reg S/144A deal was priced at 98.998% with a coupon of 4.125% to offer a yield of 4.249%. This was equivalent to a spread of 240bp over the US treasuries, or at the tight end of the final price guidance of 245bp area (+/- 5bp).

This is the lowest coupon ever achieved by an Asia, ex-Japan, corporate issuer in the BBB-rated category for a 10-year issuance with a size of US$1 billion or more.

The transaction represented the first 10-year issuance in the oil and gas sector out of Asia, outside of Japan, since July 2014 and opened up the market for private sector corporate issuances in non-Japan Asia this year. This was also the largest private sector oil and gas deal out of Asia, ex-Japan, since the last Reliance guaranteed bonds in 2012.

The bond issue was 4.5x oversubscribed with an order book of US$4.5 billion from 272 accounts. The robust demand enabled the arrangers to aggressively tighten the final price guidance to 245bp area (+/- 5bp) from the initial range of 265bp area.

"This transaction opened up the market for private sector corporate issuances out of Asia, against the backdrop of challenging market conditions," says Reliance joint CFO V Srikanth. "We successfully concluded a swift intra-day execution to capitalize on the market window and locked-in long-term funding at an attractive cost. We are happy to see the participation from repeat investors being supplemented by new high quality investors, including central banks and real money accounts."

In terms of geographic distribution, 44% of the bonds were sold in the US, 31% in Asia and 25% in Europe. By type of investors, fund managers accounted for 62%; insurance companies and pension funds 18%; banks 10%; central banks, supranational and agency 7%; and private banks 3%.

Proceeds from the bond issue will be used to fund Reliance's ongoing capital expenditures mainly in the refining and petrochemical sector in India.

Bank of America Merrill Lynch, Citi, HSBC and Standard Chartered were the joint global coordinators for the transaction, while Barclays, Deutsche Bank, J.P. Morgan and Morgan Stanley were the joint active bookrunners. ANZ, BNP Paribas, Credit Agricole CIB and the Royal Bank of Scotland were the joint passive bookrunners.