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REC raises $75 mn term loan from Sumitomo Mitsui Banking Corporation

The proceeds from this facility shall be utilised to fund power sector projects as permitted under the external commercial borrowing (ECB) guidelines of the Reserve Bank of India (RBI)

REC, Rural Electrification Corporation
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State-run REC on Wednesday said that it has raised a USD 75 million (about Rs 561 crore) term loan from Sumitomo Mitsui Banking Corporation (SMBC).

The proceeds from this facility shall be utilised to fund power sector projects as permitted under the external commercial borrowing (ECB) guidelines of the Reserve Bank of India (RBI).

"In a first for any NBFC in India, REC Limited has successfully raised a USD 75 million, 5-year Secured Overnight Financing Rate ('SOFR') linked Syndicated Term Loan on October 7, 2021, with Sumitomo Mitsui Banking Corporation (SMBC), Singapore Branch appointed as the sole Mandated Lead Arranger and Bookrunner," a company statement said.

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 the first such deal by any corporate in India, it added.

REC Chairman and Managing Director Sanjay Malhotra said, "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," he added.

SMBC's Managing Executive Officer and Deputy Head, Asia Pacific Division, Rajeev Kannan said, "We are pleased to partner with REC for our first SOFR linked ECB facility in India and for providing the solutions for interest rate risk management."

As a leading player in the syndicated loans and ECB market, SMBC is committed to working with Indian PSUs and corporates using the new interest rate benchmarks, he added.

REC Ltd is a Navratna NBFC focusing on power sector financing and development across India.

Established in 1969, REC provides financial assistance to state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives and private sector utilities.