The proposed sale by India’s Reliance Industries Ltd (RIL) of a 20 per cent stake in its oil-to-chemicals (O2C) business to Saudi Aramco will reduce RIL's debt leverage, a credit positive, said Moody's Investors Service in a new report.

In addition, RIL has announced it will sell a 49 per cent stake in its fuel marketing business in India to BP for $1 billion.

"The stake sales are in line with RIL's commitment to reduce its net debt to zero by March 2021, and reflect its commitment to maintaining a strong financial profile despite significant capital spending over the last five years," said Vikas Halan, a Moody's senior vice president.

Moody's estimates that the two transactions together will reduce RIL's net debt by $16 billion, and lower its leverage – as measured by net debt/EBITDA – by 1.2x from 3.2x for the fiscal year ending March 2019.

The two transactions follow the sale of its telecommunications tower business in July 2019 to Brookfield Asset Management for INR252 billion ($3.54 billion).

The company has also transferred its optical fiber assets to an infrastructure investment trust and expects to complete the sale of those assets to a strategic investor by March 2020.

Further, the company announced its intention to sell stakes in its digital services and retail businesses to strategic investors and also monetize some of its real estate and financial assets. – TradeArabia News Service