The billionaire Mukesh Ambani-led company aims to raise up to 200 billion rupees ($2.40 billion) via 10-year bonds on Thursday, its first such fundraise since May 2020.

"There is demand from long-term investors like insurance and pension funds. There has been a limited number of corporate bonds issuance in longer tenor in the last two quarters, so, this RIL issue comes at an opportune time," said Badrish Kulhalli, head of fixed income at HDFC Life Insurance.

In February, HDFC raised 250 billion rupees via 10-year bonds at 7.97% coupon, making it the biggest bond issue by an Indian company.

"Reliance's longer-tenor bond issue is very attractive and we expect around 50%-70% of the issue size to be taken up by LIC, and another 10%-20% by a state-run provident fund house," a banker aware of the development said.

Reliance and LIC did not reply to Reuters emails seeking comment.

The company is likely to receive bids in the range of 7.70%-7.80%, around 30-40 basis points (bps) above the 10-year benchmark government bond yield on an annualised basis, traders said, adding they expect over-subscription.

The spread against the 10-year benchmark bond yield for the HDFC issue was around 50 bps.

Reliance's bonds, rated AAA by CRISIL, are partly paid where the 50% of the issue size will be paid on allotment day, which is Friday and the remaining 50% on Dec 15.

"The partly paid debenture structure, with staggered redemption, suits mainly insurance companies," said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap.

A lack of adequate supply of longer term bonds from private companies will also help Reliance, the bankers said.

Reliance has said it will use proceeds from the issue to refinance existing borrowings, on capex and in investments on domestic subsidiaries where it has a majority stake.

($1 = 83.2550 Indian rupees)

(Reporting by Bhakti Tambe and Dharamraj Dhutia; Editing by Nivedita Bhattacharjee)

By Bhakti Tambe and Dharamraj Dhutia