Indian state-owned infrastructure finance company REC Ltd. raised $500mn via a 5.5Y bond priced on Monday at a yield of 2.303%, 170bp over Treasuries and 35bp inside initial guidance of T+205bp area. The new senior unsecured bonds carry a coupon of 2.25% and are expected to be rated Baa3/BBB- in line with the issuer rating. Orders for the new bond peaked at $2.25bn with some investors pulling out post the 35bp tightening to reach final orders of $1bn. Asia took 71% of the issuance, EMEA 25% and others 4%. In terms of investor type, fund managers took 72%, insurance, pension funds and sovereigns 16%, banks 9% and private banks 3%. Power Finance Corp (PFC) holds a 52.63% stake in REC with the state in turn holding a 56% stake in PFC.
Proceeds from the issuance will be used to finance power projects in accordance with the approvals granted by the RBI and in accordance with the ECB guidelines of India and the applicable laws, as per Bloomberg. Barclays, HSBC (M&D), MUFG and Standard Chartered were joint lead managers on the deal. The pricing on the new bonds was in line with REC’s existing dollar bond curve given that its older 3.875% bonds due July 2027 are currently trading at 108.14 yielding 2.48% on the secondary markets.