Rural Electrification Corporation (REC) on Monday priced its three-year dollar bonds at 115 basis points over the US Treasury yield to raise $400 million, sources aware of the deal confirmed to FE. The initial price guidance of 125 basis points over the Treasury was revised to a finer, final guidance of 115-120 basis points. This indicates a reduction in the borrowing cost compared with what was anticipated initially. The bonds received bids in excess of $600 million from investors till Monday evening, according to a source.

Although this may not indicate high investor interest in comparison to other bond offers from India earlier in the year, it is noteworthy that the bonds were priced in the usually inactive year-end period, and just days ahead of a possible Fed rate hike.

An investment banker close to the deal pointed out that the issue shows how public-sector units (PSUs) are increasingly becoming comfortable with the dollar bond market. “We can say it was a good transaction considering the present market conditions,” he said.

Moody’s Investors Service has assigned a Baa3 rating to REC’s proposed senior unsecured notes issued under its $1-billion medium term note programme. The rating outlook is stable, it said.

According to Moody’s, the bonds will be listed on the Singapore Exchange Securities Trading and the International Securities Market (ISM) of the London Stock Exchange. ANZ, Barclays, Mizuho and MUFG were the bankers to the deal.

This is the second dollar bond offering by REC this year. In June, the company had picked up $450 million by issuing 10-year paper at a coupon rate of 3.875%. A noteworthy fact was the tightening of the spread from the initial guidance. The bonds were priced at 167.50 basis points over the

Treasury yield which was considerably lower than the initial price guidance of 200 bps over the Treasury.

The year 2017 has seen overseas bond issuances from India hit $15 billion so far. Although fund raising by Indian entities from the overseas debt market fizzles out well before the end of the year, issuances this time gathered pace over the past two months with many firms like Indian Railway Finance Corporation and Power Finance Corporation tapping the dollar market.

The latest bond offering came from ICICI Bank’s Dubai branch that issued 10-year dollar bonds to raise $500 million at a coupon rate of 3.8%.