Rural Electrification Corporation (REC) is issuing public tax free bonds, the first of its kind in the country. Rajeev Sharma, CMD, REC shares details with CNBC-TV18 post its first public issue this year.
Below is an edited transcript of Rajeev Sharma’s interview on CNBC-TV18. Q: Give us the details of the tax-free bonds and how is the subscription looking at this point in time?
A: We are going for Rs 5,000 crore. We have already mobilized Rs 500 crore through private placement and are going for Rs 4,500 crore bond. There are two series, one is for ten years and another one for fifteen years. For resell investors, we are offering 7.72 percent for ten years and for fifteen years we are offering 7.88 percent interest rates.
Q: What about institutional investors? Which yield option is available to them?
A: For them it is 7.22 percent and 7.38 percent for fifteen years and 40 percent of my issue is reserved for the retail investors.
Q: How is the subscription looking, are you confident of Rs 4,500 crore because your initial amount is Rs 1,000 crore and you have the option to retain oversubscription upto Rs 4,500 crore?
A: Yes, I am quite confident because we are the first company to come to the market with tax free bonds and that’s why there will be lots of appetite in the market and we will be able to raise Rs 4,500 crore.
Q: How will be your funds post this bond issue? How exactly would these proceeds be used?
A: We are one of the largest lenders in the power sector, therefore, this money will be utilized immediately for disbursing to transmission, distribution and generation sector to private as well as public sector.
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