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HomeBusinessJio Financial Services in talks with merchant bankers for maiden bond issue.

Jio Financial Services in talks with merchant bankers for maiden bond issue.

For its first bond offering, Jio Financial Services in India is in preliminary discussions with merchant bankers, four bankers told Reuters on Monday. 

The bankers stated that the company would try to raise between Rs 5,000 crore ($600.6 million) and Rs 10,000 crore through the offering and might go public in the final quarter of this fiscal year.  According to them, Jio Financial, which was formed by splitting off Reliance Industries, is currently obtaining the required approvals and credit rating. 

Since they are not permitted to speak with the media, the bankers declined to be named, and Jio Financial did not immediately respond to an email from Reuters requesting comment.  The August-listed company wants to compete with companies like Bajaj Finance by becoming a full-service provider of financial services in a quickly expanding industry that includes home, auto, and other loans.

Also read, India’s total tax receipts likely to exceed Budget Estimate in FY24 

Jio Financial Services to receive AAA Credit Rating:

“Jio Financial is expected to automatically receive a AAA credit rating due to its strong promoter parentage,” stated Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap and creator of the company. 

“While the pricing will depend on factors like tenor and balance sheet size of the company at the time of issue, being an NBFC, it will be 10-20 basis points higher than RIL.” Reliance Industries collected 200 billion rupees earlier this month through the largest-ever 10-year bond sale by a non-financial Indian company, paying 40 basis points above the government’s borrowing cost. 

According to two bankers, Jio Financial could issue shorter-term commercial papers and set up bank borrowing lines in order to determine pricing before issuing bonds.  Four bankers have also advised against issuing bonds with maturities longer than five years.  “The documentation and compliance will take time because the company is new, and we could see them coming in before end of March,” a private bank merchant banker stated.

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