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REC aims to borrow $1 bn in overseas loans

REC aims to borrow $1 bn in overseas loans
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First Published: Wed, Jul 21 2010. 04 30 PM IST
Updated: Wed, Jul 21 2010. 04 30 PM IST
New Delhi: India’s state-run lender Rural Electrification Corp (REC) aims to raise $1 billion from overseas borrowings this fiscal to fund power projects in Asia’s third largest economy, a top official said.
REC plans to raise $400 million through overseas borrowing in the second week of August, with Bank of Tokyo and Mitsui along with State Bank of India mandated to arrange the issue, HD Khunteta, director, finance, said on Wednesday. “It is a $200 (million) plus $200 (million) green shoe option. We have decided to raise the funds at 176 basis points, excluding withholding tax, above LIBOR. It is a five-year duration loan,” he told reporters.
Indian infrastructure projects including power plants have become a major driving force for the $100 billion global project finance market in the first half of the financial year and domestic as well as global finance firms are vying for a share of this pie.
“The economy is growing so the demand for power is also growing. New large power plants are coming up both at centre and state level,” Chairman J. M. Phatak added explaining the rationale for raising of funds.
REC lent Rs46.44 billion during the quarter — up 28% on year, while it has sanctioned loans worth Rs228.82 billion to various power projects, a company statement said.
REC has also mandated HSBC to arrange an overseas loan of $70 million at LIBOR plus 210 basis point by end-August.
“This is including withholding tax. This loan is also of five year duration,” Khunteta said.
He also said REC has sought RBI approval to raise up to $750 million through overseas borrowings on top of its current approvals from the central bank to raise $500 million.
He said REC plans to borrow about Rs280 bn including overseas borrowing in the current fiscal to fund power projects.
REC has sought infrastructure finance company status for itself, Khunteta added.
The lender has posted a 24% higher net profit to Rs5.87 billion, on a net sales of Rs19 billion.
Shares in the firm closed 1.34% down at Rs297.95 in a Mumbai market that was up 0.55%.
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First Published: Wed, Jul 21 2010. 04 30 PM IST