IIFCL's credit enhancement debuts with renewable energy issuance

ReNew Wind & Hindustan Power raise bonds; IREDA to come out with Rs 2,000 cr bond issue

On a day two leading players in the renewable energy sector announced bonds issues through a uniquely structured arrangement with IDFC and YES Bank, the Union government’s Indian Renewable Energy Development Agency got AA+ rating from IndiaRatings for a Rs 2,000-crore tax-free bond issue, likely later this month.

ReNew Wind Energy issued Rs 451 crore worth of bonds with IDFC and Hindustan Power Rs 380 crore worth bonds with YES Bank. The issues are the first ones to be done under the credit enhancement scheme of Indian Infrastructure Finance Company Ltd (IIFCL). For the bond issue of both the companies, IIFCL would provide the first loss partial credit guarantee to the bondholders along with an irrevocable back-stop guarantee with the Asian Development Bank.

“We have always been providing innovative financing solutions to the infrastructure sector. Credit Enhancement would not only help in addressing the challenges which the commercial banks face like ALM, Capital adequacy and exposure but would also help the infrastructure projects in reducing their cost of debt,” said Santosh B Nayar, chairman and managing director, IIFCL.

Both the companies would be refinancing their debt through the bond issue. ReNew Wind Energy (Jath) Ltd, a subsidiary of ReNew Power Ventures, would go into its 84.65 Mw wind power project in Maharashtra. “We have raised funds of more than Rs 1,100 crore in the past six months from the Indian bond markets.  This is in addition to more than Rs 7,000 crore we have raised as loans from Indian and overseas lenders,” said Sumant Sinha, chairman and CEO, ReNew Power.

For Hindustan Power, however, this is the first bond issue, Ratul Puri, chairman, told Business Standard. “It is not a big amount but with this, bonds start moving debt out of PSU banks,” he said. Placement of these bonds besides opening a new market for financing infrastructure projects would also significantly bring down the cost of capital for the projects. “Our clean energy arm has had many firsts in the Indian solar sector. We are happy to continue with the tradition and be the first and largest solar player to enter the credit enhancement bond market,” Puri added.