Rural Electrification Corporation (REC), a leading state-run infrastructure finance company in the power sector, will raise at least Rs 4,500 crore during the remaining part of the current financial year, by private placement of bonds and external commercial borrowing (ECB).
“We had a borrowing target of Rs 30,000 crore for this financial year, out of which we have already raised about Rs 21,000 crore. We are also raising Rs 4,500 crore through tax-free bonds. The remaining will be raised by way of private placement of bonds and ECB,” said Ajeet Agarwal, director (finance).
He said it was possible the borrowing for this financial year might exceed Rs 30,000 crore, due to growth in disbursements in the fourth quarter. As on September 30, the loan book stood at about Rs 112,000 crore and disbursements at Rs 14,500 crore, said Agarwal.
REC, said the director, had a target of 20-plus per cent growth in the loan book and a 10 per cent growth in disbursements. “Half the target has been achieved as on September 30,” he said.
In this financial year, REC has raised $250 million (Rs 1,375 crore, taking the $ conversion at Rs 55) by ECB. This $250 million is a part of the Rs 21,000-crore funds they have already raised. REC has approval to raise another $500 million through ECB, which they'd do before March 31, said Agarwal. “We had raised $250 million at a rate of six months Libor plus 190 basis points,” he said.
Domestically, REC raises funds by private placement of bonds, commercial paper and now tax-free bonds.
The tax-free bond issue will open on December 3 and remain open till December 10. The issue size of these secured, redeemable and non-convertible bonds is an aggregate of Rs 1,000 crore, with an option to retain oversubscription up to the shelf limit, Rs 4,500 crore.
The bonds bear a fixed rate of interest under two series — a tenure of 10 and 15 years, respectively. The coupon rate for 10-year and 15-year bonds is 7.22 per cent and 7.38 per cent per annum, respectively. However, an additional interest rate of 0.5 per cent per annum shall be payable to individual investors.