REC Ltd today announced that it has raised $1.15 billion in August 2023 in two tranches from a consortium of six banks as the Mandated Lead Arrangers and Bookrunners (MLABs).
Tranche 1 of $505 million was raised from Bank of Baroda, Gujarat International Fin Tec-City (GIFT City) IFSC Banking Unit (IBU); Axis Bank, GIFT City IBU and State Bank of India, London Branch on August 3, 2023. Tranche 2 of $645 million was raised from State Bank of India, London Branch; Bank of India, GIFT City IBU; Bank of India, London Branch; and HSBC, GIFT City IBU on August 31, 2023.
“Both the tranches taken together saw an aggregate commitment of $550 million from GIFT City IFSC Banking Units (IBUs). This is the highest ever commitment to REC from GIFT City IBUs in a single month, surpassing the earlier largest commitment of $345 million in December 2021,” stated REC.
The loans have been tied up for a 5-year tenor and are benchmarked to Overnight SOFR (Secured Overnight Financing Rate), which is the benchmark rate for loans denominated in USD. The proceeds from this facility shall be utilized to fund power, infrastructure, and logistics sector projects as permitted under the ECB guidelines of the Reserve Bank of India.
The funds have been raised under REC’s Market Borrowing Programme of INR 1.20 lakh crore for 2023-24.
Commenting on the successful closure of the USD term loans, Vivek Kumar Dewangan, chairman and managing director of REC Ltd, said, “REC has been actively looking for various innovative options to diversify its sources of borrowings to lower its cost of borrowings. The successful closure of these two transactions within a single month is a testimony to the strong financials of REC Ltd. and continues to remain attractive to international lenders.”
In a separate development, REC has signed a foreign currency term loan agreement for $100 million with Export Import Bank of India (Exim Bank). This is the first term loan being extended by Exim Bank to REC. The loan has been tied up for a 5-year tenor and is bench-marked to SOFR (Secured Overnight Financing Rate), which is the benchmark rate for the loans denominated in USD.
“The proceeds of the loan will be used towards refinance for on-lending to its borrowers in power, infrastructure and logistics sector for importing capital equipment. The funds will be raised as part of REC’s Market Borrowing Programme of INR 1.20 lakh crore for the year 2023-24,” stated REC.
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