Jio Financial Services In Discussion With Merchant Bankers For Maiden Bond Issue: Report

Jio Financial, non-banking financial company which was part of Mukesh Ambani's Reliance Industries, is in the process of getting its credit rating and other necessary approvals, the bankers said

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

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

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

"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." Earlier this month, Reliance Industries raised Rs 200 billion through 10-year bonds in the largest issue by a non-financial Indian firm, paying 40 basis points more than the government's borrowing cost. 

Ahead of the bond issue, bankers have recommended that Jio Financial issue shorter-term commercial papers and put bank borrowing lines in places to establish pricing, said two bankers. It has also been recommended to issue bonds not longer than five-year maturity, according to four bankers. 

"Since the company is new, the documentation and compliance will take time, and we could see them coming in before end of March" a merchant banker with a private bank said. 

Jio Financial Services in October logged a net profit of Rs 668 crore for the July-September period, a jump of 101 per cent from the previous quarter. This is the first quarterly result after Jio Financial Services listed on the exchanges in August. The firm’s total income was at Rs 608 crore for the quarter. Whereas the lender's interest income was at Rs 186 crore, dropping from Rs 202 crore in the April-June FY24 quarter.