REC floats tax-free bonds

Rural Electrification Corporation on Monday launched a public issue of tax-free bonds to raise Rs 4,500 crore, offering interest in the range of 7.22 per cent and 7.38 per cent annually.

The issue size under Tranche-1 aggregates to Rs 1,000 crore with an option to retain oversubscription up to the shelf limit of Rs 4,500 crore, the state-owned company said.
The bonds will bear a fixed rate of interest under two separate series having tenure of 10 and 15 years respectively.

“For all the categories, the coupon rates for the Tranche 1 Series 1 and Tranche 1 Series 2 stand at 7.22 per cent per annum and 7.38 per annum respectively,” the company said.

An additional interest at the rate of 0.50 per cent per annum will be payable to category IV investors for the Tranche 1 Series 1 and Tranche 1 Series 2, it added.

The issue will remain open from December 3 to 10 this year with an option for early closure, subject to the issue being open for a minimum of three days.

“We are raising Rs 4,500 crore by the issuance of these tax free secured redeemable non-convertible bonds,” REC Chairman and Managing Director Rajeev Sharma told reporters.
A K Capital Services, Enam Securities, ICICI Securities, Kotak Mahindra Capital Company and SBI Capital Markets are the lead managers for the issue. SBICAP Trustee Company and Karvy Computershare are the Trustees for the Bondholders and Registrar respectively.

The company, which had targetted to raise Rs 30,000 crore during the current fiscal, has so far raised Rs 22,000 crore through various instruments. It has plans to raise USD 500 million through external commercial borrowings or ECBs and has initiated the process.

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