Rural Electrification Corp, the nodal public sector company to finance power projects in rural India is planning to raise $300 million by selling bonds to overseas investors as early as next week, two people familiar with the deal said.
The bonds are so called green bonds and will be used to finance environmentally friendly projects. These bonds will be the first such by REC under its $1 billion medium term note (MTN) programme, these people said.
“This is the first time in many years that this company is raising funds by selling dollar bonds. Bankers for the issue will meet investors in Asia and Europe for three days starting from June 26. The sale may happen even next week depending on the demand for the paper,” said one of the persons familiar with the issue.
Barclays, BNP Paribas, HSBC, ANZ Grindlays and Mitsubishi UFG are the bankers to the issue.
Funds raised from a green bond are used for projects like renewable energy, environment friendly technology and pollution control. Globally some large funds have specific mandates to invest in these kind of instruments which mean that these papers have a pool of investors ready to put money.
In a rating release Moody’s Investors Service, assigned a (P)Baa3 long-term rating to the company’s $1 billion MTN program and a Baa3 rating to the proposed senior unsecured green bond.
“The proceeds of the issue of the Notes will be applied by REC to finance Eligible Green Projects as described in, and in accordance with, REC’s Green Bond Framework. Broadly, Eligible Green Projects will include solar, wind, and biomass projects or assets, hydropower projects, and sustainable water and waste management projects,” Moody’s said.
In an interview with ET in April REC chairman PV Ramesh said the company is looking at diversifying from power sector lending to financing equipment manufacturing, energy efficiency schemes, power plants renovation and coal blocks development. The company expects to borrow Rs 55,000 crore in the current fiscal ending March 2018.
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