ReNew Power’s $325 million dollar bond offering sees strong demand
Despite the ongoing pandemic, the company managed to raise the bonds at the cheapest pricing till date for its paperThe bond offering saw strong investor demand from the US
PremiumMumbai: ReNew Power Pvt. Ltd has raised $325 million selling bonds to foreign investors, in the first dollar bond offering by Indian renewable energy company since the covid-19 disruption.
Mint reported on 16 October that ReNew was looking to raise debt through offshore bonds.
Despite the ongoing pandemic, the company managed to raise the bonds at the cheapest pricing till date for its paper.
“We started out with 5.875% and then we tightened it down to 5.375%. The order book was close to $2 billion," said Kailash Vaswani, president corporate finance at ReNew Power.
The bond offering saw strong investor demand from the US.
“Given the ESG theme that is playing out in the market, we saw a lot of demand from US investors," said D Muthukumaran, CFO at ReNew Power.
On Friday, international rating agency Moody's Investors Service said that it has assigned a Ba3 rating to the proposed bonds to be issued by India Green Energy Holdings, a financing entity set up for the purpose of the fundraise.
India Green will use the proceeds from the dollar bonds to subscribe to seven-year non-convertible debentures (NCDs) to be issued by 11 restricted subsidiaries (RG3), which are either wholly-owned or majority-owned subsidiaries of ReNew Power, the rating agency said. These subsidiaries comprise of solar and wind projects of over 400 megawatts (MW) capacity.
The proceeds from the NCDs will be used by the restricted subsidiaries to refinance existing debt, pay related transaction costs and fund a Rs750 crore loan (approximately $100 million) to ReNew Power.
ReNew Power is a seasoned participant in the dollar bond market. Earlier this year in January, the company raised $450 million through a dollar bond issuance.
“As a borrower they have a fairly large capital requirement. For them to diversify their sources of capital is a key objective behind their strategy to raise funds from the offshore market," said a person aware of the company’s fundraising plans.
He added that out of a total debt of $4.5 billion, almost $2 billion is now from dollar bonds.
“The market conditions had worsened after the pandemic hit in march. So they were closely monitoring the market trying to see when the right opportunity will be available. In these circumstances you have to be ready without even assuming that a deal is possible and then when the market conditions are right you quickly go ahead with the issuance," the person added.
After raising $20.7 billion in 2019, the most in six years, through offshore bond sales and another $10 billion in the first half of the calendar year 2020, the covid-19 pandemic slowed down Indian issuers plans to tap the offshore bond market.
Only a handful of companies have tapped the market in the last few months such as REC Ltd, UPL Ltd, Adani Ports and Vedanta Resources.
"Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!" Click here!
