1. REC prices green dollar bonds to raise $450 m

REC prices green dollar bonds to raise $450 m

Rural Electrification Corp (REC) and Samvardhana Motherson Automotive Systems Group have priced their respective dollar and euro bonds on Thursday, sources aware of the development said.

By: | Mumbai | Published: June 30, 2017 5:37 AM
The initial price guidance stood at 200 basis points over the benchmark yield, according to market sources.

Rural Electrification Corp (REC) and Samvardhana Motherson Automotive Systems Group have priced their respective dollar and euro bonds on Thursday, sources aware of the development said. REC has priced its green dollar bonds at 167.50 basis points over the 10-year US Treasury yield to raise $450 million, according to information provided by a banker close to the deal. The initial price guidance stood at 200 basis points over the benchmark yield, according to market sources. “The spread tightened considerably and this could possibly be the lowest spread on a 10-year dollar bond from India this year. The issue got subscription of over $2.5 billion,” said a banker aware of the deal.

HSBC, Mizuho, Barclays, BTMU, ANZ, and BNP are the bankers to the deal. Moody’s Investors Service had assigned a ‘(P) Baa3’ long-term senior unsecured rating to REC’s $1 billion medium term notes (MTN) programme and a ‘Baa3’ rating to the proposed senior unsecured green bond under the MTN programme. The proceeds of the issue will be applied by REC to finance eligible green projects. Bloomberg data shows that REC had last issued dollar bonds in January 2011 at 4.25%.

Samvardhana Motherson Automotive Systems Group BV is also set to price its seven-year euro bonds. According to the latest information, the final price guidance stood at 145 (+/-) 5 basis points over the 7-year euro swaps. The company might raise close to 300 million euro.

“The issue saw a final price guidance that is way less than the pricing on the 7-year Euro bond it did in 2014,” a banker close to the deal pointed out. BNP Paribas, Deutsche Bank, Barclays and HSBC are the bankers to the issue, according to a source. Fitch Ratings has assigned the Netherlands-based company’s proposed euro senior secured notes an expected rating of ‘BBB-(EXP)’. “SMRP BV intends to use the proceeds to repay debt and for general corporate purposes,” Fitch said in a release.

Bloomberg data showed that Samvardhana had done a dollar bond in June 2016 to raise $400 million via a 10-year issue at a coupon rate of 4.875%. Prior to that, it had issued Euro-denominated bonds in June 2015 to raise 100 million euro at a coupon rate of 3.7%. SMRP BV is a joint venture between Motherson Sumi Systems, the flagship company of SMG, and Samvardhana Motherson International, the principal holding company of SMG through their subsidiaries.

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