After mopping Rs 3,800 crore by selling domestic rupee bonds last week, Rural Electrification Corporation (REC) now plans to raise Rs 12,000 crore through similar instruments. The non-banking financial company, one of the biggest lenders to the power sector, closed an issue last Thursday.
“We are looking to raise (an additional) Rs 12,000 crore by the year-end,” H D Khunteta, chairman and managing director, told Business Standard. The coupon rate for the rupee bonds that the company sold this month was 9.75 per cent, Khunteta said.
In the current financial year, REC has raised about Rs 16,000 crore, the majority of which was accounted for by domestic rupee bonds.
While yields on government bonds are rising, due to the oversupply of sovereign paper and the devolvement taking place, REC has been able to comfortably raise funds. “We did not face any hurdles in raising funds, despite the excess borrowing by the government,” Khunteta said.
However, the company's overseas fund-raising plans are still uncertain, owing to the delay in securing government approvals. The company had proposed to the government that it be allowed to raise $1 billion through foreign currency convertible bonds. “The proposal has already been presented. We are still waiting for the government's approval and have not heard about any update on this,” Khunteta said.
REC's plan of raising $200 million through bonds denominated in Swiss francs is also awaiting the government's approval. “The fund-raising plans through Swiss bonds might be delayed till January,” Khunteta said.
