Milbank Advises German Development Bank Kfw On $2 Billion Loan For Major Expansion Of Reliance Industry's Petrochemical Projects In India

Link to the German version of this press release: Milbank berät KfW bei der 2-Mrd.-USD-Konsortialfinanzierung von RIL-Projekten in Indien

LONDON & FRANKFURT, 14 th May 2012 – In a major cross-border financing for one of the biggest oil and gas projects in South Asia, law firm Milbank, Tweed, Hadley & McCloy LLP has represented Germany's state-owned development bank KfW IPEX Bank GmbH as lead arranger in a $US 2 billion financing for expansion of several petrochemical projects in India operated by Reliance Industries Limited (RIL).

The financing, which closed on 7 May, was covered by the German export credit agency Euler Hermes Deutschland AG.

The deal is noteworthy on several fronts. Besides being the largest underwriting ever by Euler Hermes, the US$2 billion represents the biggest financing ever for KfW, which is jointly owned by the Federal Republic of Germany (80%) and the States of Germany (20%). The loan, which has a 13-year maturity, will help diversify Reliance Industries' funding sources and significantly extends the maturity profile of its long-term debt. Reliance is expected to primarily use the loan to finance purchase of goods and services from some 40 German suppliers in expanding its petrochemical facilities in the Indian cities of Jamnagar, Hazira, Silvassa and Dahej.

Euler Hermes for the first time accorded to RIL a "Better than Sovereign" rating. The deal was very well received by institutional buyers, drawing a 50% oversubscription.

KfW IPEX-Bank GmbH arranged the Euler Hermes cover, while the following nine banks participated in funding the facility: KfW, Citibank N.A.; Commerzbank AG; Nord LB, Banco Santander, S.A., Landesbank Baden-Württemberg, DZ BANK AG, BHF-BANK AG and ING Bank.

Milbank's financing team was led by London-based project finance partner John Dewar, along with finance Of Counsel Anthony Morton in Frankfurt.

"Although this type of financing is not by itself new, it...