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Jio Financial Services in talks with merchant bankers for maiden bond issuance

Reliance’s Jio Financial Services is in advanced talks with merchant bankers for its first bond issue, four bankers told Reuters on Monday, the news agency said. According to the report, the company may plan to raise Rs 5,000 crore ($600.6 million) to Rs 10,000 crore through the issue and is likely to capture the market in the last quarter of this financial year.

Bankers said Jio Financial, the non-banking finance company (NBFC) that was part of Mukesh Ambani’s Reliance Industries, is in the process of getting its credit rating and other necessary approvals. The company, which was listed in August, plans to establish itself as a full-service financial services firm in the fast-growing market, including auto, home loans and other products, competing with companies like Bajaj Finance. Has been.

“Jio Financial has got a strong promoter parentage and it is expected that the company will automatically get a AAA credit rating,” said Venkatakrishnan Srinivasan, founder and managing partner, Rockfort Fincap.

“While the price will depend on factors such as the company’s tenure and balance sheet size at the time of issue, being an NBFC, it will be 10-20 basis points higher than RIL.” Earlier this month, Reliance Industries raised Rs 200 billion through 10-year bonds in the largest issue by a non-financial Indian firm, 40 basis points above the government’s borrowing cost.

Before issuing the bonds, bankers recommended that Jio Financial issue short-term commercial paper and put in place bank credit lines to determine pricing, the two bankers said. Issuance of bonds with maturity of more than five years has also been recommended, according to four bankers.

“Since the company is new, documentation and compliance will take time, and we may see them coming before the end of March,” said a merchant banker at a private bank.

Jio Financial Services in October reported a net profit of Rs 668 crore in the July-September period, up 101 per cent from the previous quarter. This is the first quarterly result for Jio Financial Services after its listing on the exchanges in August. The total income of the company in this quarter was Rs 608 crore. While the lender’s interest income declined to Rs 186 crore in the April-June FY24 quarter from Rs 202 crore.

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