Reliance Communications obtains loan from Chinese banks

A trio of Chinese state-owned banks has agreed to lend India’s Reliance Communications (532712.BSE, RCM.NSE) US$1.2 billion, a move which underscores the expanding reach of Chinese banks, the Financial Times reported. The loan, issued by the Industrial and Commercial Bank of China (601398.SH, 1398.HKG), China Development Bank and Export Import Bank of China, will be used to refinance a US$1.2 billion convertible bond which was issued in 2007 and starts to come due at the beginning of March. The firm says the loan will have an “extended” maturity period of seven years and an “attractive” rate of 5%. Some suspect the favorable terms were extended in part because Reliance has significant dealing with Chinese companies. Many Indian banks has been accustomed to taking out loans with US and European banks, but high interest rates and a falling rupee have incentivized them to turn to other sources.