ReNew Power to raise Rs 1,000 cr equivalent in part-guaranteed forex bonds

Will be the first such issuance in over a year, signalling that high-yield markets overseas are opening up, but remain circumspect on likely impact on debt serviceability after Covid outbreak

Green energy firm ReNew Power is planning to raise Rs 1,000 crore equivalent in foreign currency bonds after securing a partial guarantee from GuarantCo, according to sources familiar with the matter.

The issuance could be announced in a week or so, and would be the first such issuance in more than a year. This also indicates that the high-yield markets overseas are opening up, but are still circumspect on the likely impact on debt serviceability after the Covid-19 outbreak.

High-yield bonds from Asia totaled $2.2 billion in June, after two months of no issuance, according to rating agency Moody’s. All the seven deals were from China-based property companies, the rater noted. In that sense, ReNew Power would be opening up the chapter for Indian companies after the Covid outbreak.

However, the fact that it would require a partial guarantee support indicate that it won’t be easy going for Indian companies in the overseas markets, say bond arrangers. The rupee market is also not welcoming for companies with lower rating. The ReNew Power group companies generally have domestic ratings of A and A+, but the international rating is at BB- by Fitch.

“GuarantCo has a higher acceptance among investors than ReNew Power, and therefore the partial guarantee makes the issuance safer for a high yield instrument,” said a banker aware of the issuance. GuarantCo gets the guarantee fees in return from ReNew Power.

GuarantCo in the past has given partial guarantees to few Indian firms, including to Shriram Transport and AU Financiers.

Emails sent to ReNew Power and GuarantCo remained unanswered.

ReNew power has around 5.6GW of operational capacity from wind (60 per cent) and solar (40 per cent) power projects and a project pipeline of around 2.1GW. ReNew's holding company directly holds 485MW of the wind-power assets, with the rest held by various special purpose vehicles, according to Fitch. ReNew also raises bonds regularly from the market and in January had raised $450 million at 5.875 per cent.