REC to raise $750 m via bonds, loans

Rural Electrification Corporation (REC), a state-owned power sector financier, is planning to raise $750 million, or `3,340 crore, by October.
“The approval from Reserve Bank of India (RBI) to raise these funds is likely in the next 10-15 days,” H D Khunteta, chairman and managing director & director (finance), REC, told DNA Money.
Of the $750 million, about $300 million will be raised by the way of Samurai bonds, $200-300 million by way of Swiss bonds and the rest through private placement of debt or syndicated loans, said Khunteta, who was earlier this month given the additional charge of CMD for three months following J M Phatak’s resignation.
Samurai bonds are yen-denominated bonds issued in Tokyo by a non-Japanese company while Swiss bonds are denominated in Swiss francs. According to Khunteta, the tenure of both Samurai and Swiss bonds will be five years. The coupon for Swiss bonds is likely to be 3.25-3.5% and 1.8% for Samurai.
REC will first opt for raising funds by the way of private placements of debt or syndicated loans in the next 45-60 days, followed by a Samurai bond issue and then a Swiss bond offering. REC had borrowed $1.2 billion last fiscal.
As on December 31, REC had a loan book of about `76,500 crore, 84% of which is for public sector units. More than half the loan book is for transmission & distribution projects.
REC’s sanction and disbursement targets for 2010-11 were `50,000 crore and `26,000 crore.
The company has not yet announced its fourth quarter numbers. In the first nine months of the year, the company sanctioned about `43,000 crore and disbursed `16,000 crore.