REC closes $75 m SOFR-linked term loan with Sumitomo Mitsui Banking Corp
27 October 2021
Rural Electrification Ltd (REC) has successfully raised a $75 million in 5-year Secured Overnight Financing Rate (SOFR)-linked syndicated term loan with Sumitomo Mitsui Banking Corporation (SMBC), in a first for any NBFC in India. Sumitomo’s Singapore branch is acting as the sole mandated lead arranger and bookrunner for the term loan.
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 also the first such deal by any corporate in India, says an REC release.
RCE proposes to utilse the proceeds from this facility to fund infrastructure power sector projects as permitted under the ECB guidelines of the Reserve Bank of India.
“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,” Sanjay Malhotra, chairman and managing director of REC, said.
REC Ltd is a Navratna NBFC focusing on power sector financing and development across India. Established in 1969, REC Limited has completed over fifty years in the area of its operations. 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, including generation, transmission, distribution projects as well as renewable energy projects.