Instruments & Regulations

REC Limited issues first Japanese Yen green bonds worth JPY 61.1 billion

Gagan Sidhu

Notable because

India’s 50 GW per year (for five years) RE bidding trajectory will result in 250 GW of capacity needing financing if bids are to translate seamlessly into capacity addition. Raising low-cost financing in Yen can be an effective way for lenders such as REC to raise capital for India’s power-sector transition. Notably, these bonds will be exclusively listed on India INX and NSE IFSC, both of which are exchanges located at GIFT City in Gujarat.

What to look out for in the months ahead

Indian corporates and lenders were extremely active borrowers in the US dollar denominated international green bond markets a few years ago when US dollar interest rates were at record lows. Will this foray by REC into a lower interest rate environment spur other borrowers to also look eastwards, particularly, as in certain years, ~50% of international green bond issuances out of India have been placed with Asian accounts?