REC Raises 5 Year Loan Of $75 million From SMBC

In a first for any NBFC in India, REC Limited has successfully raised a USD 75 million, 5-year Secured Overnight Financing Rate (“SOFR”) linked Syndicated Term Loan on October 7, 2021, with Sumitomo Mitsui Banking Corporation (SMBC), Singapore Branch appointed as the sole Mandated Lead Arranger and Bookrunner. Along with the loan, REC has also entered into interest rate swap referencing SOFR to hedge the interest rate risk on this facility, which is the first such deal by any Corporate in India.

The proceeds from this facility shall be utilized to fund infrastructure power sector projects as permitted under the ECB guidelines of the Reserve Bank of India.

Commenting on the successful closure of the USD Term Loan, Mr. Sanjay Malhotra, Chairman and Managing Director of REC, said, “With the imminent cessation of LIBOR and following the notification from the Reserve Bank of India on roadmap for LIBOR Transition, we are very happy to raise this SOFR linked Term Loan Facility, which is also the first one by any NBFC in India. The experience gained from the process will enable REC in USD LIBOR transition to SOFR for our existing term loans in a better manner.”

REC Limited is a Navratna NBFC focusing on Power Sector Financing and Development across India. It provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities. Its business activities involve financing projects in the complete power sector value chain; different type of projects includes Generation, Transmission, Distribution Projects, and Renewable Energy projects. Key government backed initiatives like the UDAY scheme for discoms have also been routed through it, besides PFC.

As a Navratna, besides greater overall autonomy, the firm can invest up to Rs. 1000 crore or 15% of their net worth on a single project without seeking approval from the government.