Mumbai: REC, the state-owned power sector financier, is reportedly set to initiate the sale of perpetual bonds amounting to ₹2,000 crore on Thursday, as per sources familiar with the matter. The bond offering consists of a base size of ₹500 crore with an additional greenshoe option of ₹1,500 crore. The bonds will include a call option exercisable after a period of 10 years.
The bidding for this bond sale is expected to take place on the BSE Bond portal from 10 am to 11 am on Thursday. Perpetual bonds, unlike traditional bonds, do not have a fixed maturity date. However, the presence of a call option grants the issuer the right to redeem the bonds on a specific date. Investors are attracted to such securities due to the relatively higher interest rates they typically offer compared to other fixed-income instruments.
Earlier on April 11, REC, which is a subsidiary of Power Finance Corp, initiated its domestic bond sales for the current financial year by issuing three-year bonds worth ₹2,848 crore at an interest rate of 7.51%. Just days prior to that, REC tapped into the international debt markets and successfully issued $750 million worth of green bonds maturing in five years. The coupon rate for these dollar-denominated bonds was set at 5.70%.
In a similar vein, Power Finance Corp recently conducted two tranches of debt issues, raising a total of ₹4,432 crore. The debt was issued with maturities of three years and ten years, respectively, according to insider sources.
tate-owned power sector financier REC is set to launch a ₹2,000 crore perpetual bond sale on Thursday, including a greenshoe option. The greenshoe option gives the issuer the right to sell an additional ₹1,500 crore of bonds if there is strong demand. The bonds will have a call option after 10 years, which means that the issuer can redeem them at any time after that date. The interest rate on the bonds has not yet been announced, but it is expected to be high, as perpetual bonds are a risky investment.
Here are some details about the REC perpetual bond sale:
Size: ₹2,000 crore (base size) + ₹1,500 crore (greenshoe option)
Maturity: Perpetual
Call option: After 10 years
Interest rate: To be announced
The REC perpetual bond sale is being seen as a sign of confidence in the Indian bond market. The fact that REC is issuing a perpetual bond, which is a risky investment, suggests that it believes that investors are willing to take on more risk in exchange for a higher yield.
The REC perpetual bond sale is also being seen as a sign that the government is committed to supporting the power sector. REC is a major lender to the power sector, and the sale of these bonds will help to provide it with additional funds to lend to power companies.
The REC perpetual bond sale is expected to be well-received by investors. The high interest rate on the bonds will make them attractive to investors who are looking for a high yield, and the fact that REC is a government-backed company will provide investors with some comfort.
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