REC to raise over $500 million overseas via green bonds

The company will begin roadshows for the bond sale on Tuesday.

While the size and coupon will be finalised depending upon investor interest, the bond could be priced at 6%, according to a bond trader. REC’s $450 million green bond due 2027 is trading at a yield of 5.85%.

The company, a subsidiary of state-run Power Finance Corp, has mandated Barclays Bank, DBS Bank, MUFG Securities Asia, Standard Chartered Bank and State Bank of India’s London branch as joint lead managers and joint book runners. It will hold investor meetings and conference calls in Asia, Europe and the US, REC said in a filing with stock exchanges Monday.

The paper is expected to be rated “BBB-” by Fitch Ratings and “Baa3” by Moody’s Investors Service. The five-year green bond will be issued under 144A/RegS of the Securities Act. The bond will follow REC’s green bond framework.

The amount will be raised as part of a $7 billion global medium-term note programme. The funds will be used to finance power infrastructure projects in India or to refinance existing borrowings extended to such projects as granted by the Reserve Bank of India and in accordance with external commercial borrowing guidelines.

REC has received a limited pre-issuance assurance report on February 10 from KPMG India on the alignment of eligible green projects with the REC Green Finance Framework, the company said in its offering circular. In 2017, it had raised $450 million through green bonds with a tenor of ten years. These are listed on the SGX-ST and the ISM.