REC Plans to Raise Rs 2,500 Crore through Yen Bonds

8 Jan 2024 , 11:15 AM

According to news reports, REC, one of the biggest state-sponsored infrastructure financiers, plans to raise at least Rs 2,500 crore this week through the issuance of Yen bonds. It has submitted offering details to the New York, London, Tokyo, and Singapore stock exchanges.

By choosing a Regulation S offering, REC will be able to comply with US regulations without having to register with the US stock market authority. Several individuals who purchase assets denominated in yen from both inside and outside of Japan may participate in the offering.

Japan’s economic recession has resulted in the government maintaining negative interest rates. It anticipates that this will boost borrowing behaviour and boost the economy. This implies that for foreign businesses wishing to raise capital in yen, borrowing in that currency might be less expensive. However, observers of the industry believe that Yen investors are picky and usually support A-rated businesses.

Investment bankers for the bond issue include SMBC, MUFG, DBS Bank, and Mizuho. 

REC’s credit rating is not an A. Given that the Government of India is the company’s largest shareholder, investors may find solace in the company’s lineage. The BBB-credit rating of REC is equivalent to the sovereign rating of India.

If the financing is successful, it may open up new funding options for the company, which was first involved in the power sector financing and has since expanded into financing highways, ports, airports, and electric vehicles.

Exim Bank is the only other Indian company that has raised money through yen bonds in the last five years.

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