Pricing of USD 500 Million 2.25% Fixed Rate Senior Unsecured Dollar Notes of 5.5 Year Tenor by REC Limited
Dated Feb 23 2021
REC Limited (formerly known as “Rural Electrification Corporation Limited”) has successfully raised USD 500 million 5.5-year Reg-S only bond issued under its Global Medium Term Programme of USD 7 billion. Proceeds of the bond will be used to finance power projects in accordance with the approvals granted by the RBI from time to time and in accordance with the ECB Guidelines.
This is REC Limited’s eighth venture into the international bond market. The 5.5 year benchmark has a semi-annual coupon of 2.25% per annum and a maturity date of 1 September 2026, which is the most tightly priced bond from the India NBFI space in the 5 year tenor bucket. The transaction was priced inside the fair value of existing secondary curve of REC USD bonds and is the lowest coupon ever achieved by REC in the USD bond market.
As a frequent issuer in the market and given the stable market backdrop last week, REC decided to capitalise on the environment to carry out an intraday execution with a global investor call organized on the day of launch. At the peak of the order book before Final Price Guidance (FPG), the order book crossed USD 2 billion. Finally, the transaction saw an oversubscription of more than 2 times with active participation from quality accounts. The transaction evidences strong demand and confidence from investors around the globe towards REC Limited’s differentiated credit. Over 82 investors participated in the transaction, with Asian investors taking up 71% of the deal, European investors 25% and others 4%. Over 85% of the deal was taken up by Fund Managers, Insurance Companies, Pension Funds and Sovereign.
Commenting on the success of bond issuance, Chairman and Managing Director of REC, Mr. Sanjay Malhotra, IAS said, “We are very delighted on the successful launch and completion of this transaction. A strong response to REC issuance demonstrated faith in the growth story of the Indian Power sector. REC’s bond offer attracted wide participation from international investors across Asia & Europe thereby helping us price the transaction at the lowest USD bond coupon and reduce our overall cost of funding”.
Barclays, HSBC, MUFG and Standard Chartered Bank are the joint bookrunners for the issue.