REC to tap dollar bond market after EXIM Bank's success

REC will raise funds via dollar-denominated bonds in the next two months, a company official said on Friday, encouraged by EXIM Bank's recent success to revive a plan it shelved last year.

"We will work on our plans of dollar bond issuance and would want to issue these notes in February-March," said the official, requesting anonymity as they are not authorised to speak to the media.

While the plan for raising dollar debt is "definitely on," details such as the quantum and tenor will be worked out in February, the official added.

REC, an infrastructure finance company, and Indian Railway Finance Corp (IRFC) had planned to issue dollar bonds in 2022 and even appointed lead managers.

But the two state-run companies held off due to volatile markets and rising US bond yields. An IRFC official declined to comment if the company would also revive its plan.

U.S. Treasury yields climbed 233 basis points (bps) to 3.83% in 2022 as the Federal Reserve raised interest rates by 425 bps. They have since fallen 40 bps to 3.43% on rising bets that the rate-hike cycle is near its end.

REC has a variety of options available for fundraising, and whenever the environment is conducive, it can tap the dollar bond market, the official said.

Earlier this week, Export Import Bank of India raised $1 billion through the issuance of dollar-denominated bonds maturing in 10 years at a coupon that was 190 bps higher than the 10-year U.S. yield.

"Investor outlook is very robust currently for Indian companies, said Harsha Bangari, managing director of EXIM Bank said.

"The current market is also conducive and Indian companies that have a need for dollar funding could go ahead."