In a significant financial development, REC Limited has successfully secured a total of USD 1.15 billion in August 2023 through syndicated term loans. The loans were facilitated by a consortium of six banks, acting as the Mandated Lead Arrangers and Bookrunners (MLABs).
The financing was divided into two tranches: Tranche 1 amounted to USD 505 million and 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, totaling USD 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.
A noteworthy highlight of this financing initiative was the substantial commitment of USD 550 million from GIFT City IFSC Banking Units (IBUs), marking the highest-ever commitment to REC from GIFT City IBUs in a single month. This achievement surpasses the previous largest commitment of USD 345 million recorded in December 2021.
The loans come with a 5-year tenor and are benchmarked to Overnight SOFR (Secured Overnight Financing Rate), which serves as the benchmark rate for loans denominated in USD. The funds raised through this facility will be allocated to finance projects in the power, infrastructure, and logistics sectors, in accordance with the ECB guidelines of the Reserve Bank of India. This fundraising initiative falls under REC’s Market Borrowing Programme of Rs. 1.20 lakh crore for the fiscal year 2023-24.
Commenting on the successful closure of the USD Term Loans, Mr. Vivek Kumar Dewangan, IAS, Chairman and Managing Director of REC Limited, expressed his satisfaction, stating, “REC has been actively exploring innovative options to diversify its sources of borrowings with the aim of reducing its cost of borrowings. The successful completion of these two transactions within a single month underscores the robust financial position of REC Ltd. and its continued attractiveness to international lenders. We are pleased with the enthusiastic response from banks to these loans, which also represent our largest single-month fundraising from GIFT City IBUs. This further solidifies REC’s position as the largest PSU borrower from international markets in the current year.”