The Rural Electrification Corporation (REC) is planning to raise up to $200 mn of yen-denominated loans from the Japanese market in external commercial borrowings (ECBs).
Standard Chartered Bank has been given the mandate for syndicating the loans.
This is the first time that REC will raise funds through the ECB route. REC had earlier raised funds from multilateral funding agencies like Japan Bank for International Co-operation (JBIC) and Germany’s KfW Bankengruppe. But this is the first time that the mini-ratna will borrow directly from the overseas market on commercial terms. The Reserve Bank of India (RBI) has recently cleared the corporation’s overseas borrowing plans.
The funds would be raised at 47 basis points (bps) above the yen-linked six-month LIBOR currently at around 0.60%. The total cost of borrowing including the administrative cost of raising the loan will be around 61 bps over yen-LIBOR. Funds raised through ECB will be used for REC’s core activity to finance and promote rural electrification projects across the country. REC also provides financial assistance to state electricity boards and state government departments.
Read the complete article in The Economic Times.
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