India power-sector financier REC plans first loan using Libor heir

REC Ltd., one of India’s biggest lenders to the power sector, will raise its first loan linked to the Libor alternative, joining the global move away from the debt-pricing benchmark.
 

The state-owned company will borrow as much as $75 million through a five-year loan linked to the Secured Overnight Financing Rate, or SOFR, according to people familiar with the matter, who asked not to be identified as the details are private. New Delhi-based REC has mandated a Japanese bank for the loan and will draw down the facility for funding India power projects by mid-September, the people said.

The financier’s choice of a SOFR-linked loan is part of a global push by policy makers to develop new benchmarks to replace Libor by the end of 2021 after European and U.S. banks were found to have manipulated the rate for their gain. In March, Indian Oil Corp. had mandated the State Bank of India for a $100 million SOFR-linked loan.

This would be the first SOFR-linked loan by a non-bank, or so-called shadow, lender in India. A spokesperson at REC didn’t immediately reply to an email seeking comments.