The report summarizes the debt financing of REC Limited is a public Infrastructure Finance Company in India’s power sector. Overview of each debt instruments issued is covered in the report with credit rating, face value, coupon rates, date of issue and maturity repayments etc. The report also covers the upcoming debt instruments of the company. The last part of the report briefs analysis on a company’s ability to repay the debt.

1. The report summarizes the debt financing
of REC Limited is a public Infrastructure
Finance Company in India’s power sector.
Overview of each debt instrumentsissued
is covered in the report with credit rating,
face value,couponrates,date of issue and
maturity repayments etc. The report also
covers the upcoming debt instruments of
company. The last part of report briefs
analysis on company’s ability to repay the
debt.
FIXEDINCOME
SECURITIES
Assignment Report
Rochit Patwa
350320
35th
Batch

2. INTRODUCTION
REC came into being in 1969 to articulate a response to the pressing exigencies of the nation.
During the time of severe drought, the leaders sought to reduce the dependency of agriculture
on monsoons by energizing agricultural pump-sets for optimized irrigation. Thereafter, the
country have ventured into newer paths and expanded our horizons to emerge today, as a leader
in providing financial assistance to the power sector in all segments, be it Generation,
Transmission or Distribution.
As a Navratna company under the administrative control of the Ministry of Power, the company
been rated ‘Excellent’ in terms of the MoUs signed with the Government for 22 consecutive
years. The company fund its business with market borrowings of various maturities, including
bonds and term loans apart from foreign borrowings. Domestically, REC hold the highest credit
ratings from CRISIL, ICRA, IRRPL and CARE and internationally are rated at par with the
sovereign ratings. The company have thus propelled to a net worth of over ₹30,000 crore.
DETAILS OF BORROWINGS
The company is purely bonds funded organization. These are both secured and unsecured lond-
term debts. As of march 2018, the following categories of debt instruments are traded in debt
market.
 Tax Free Bond
 Infrastructure Bonds
 Taxable Bond
 54 EC Capital Gain Tax Exemption
 Foreign Currency Bonds
 Post-issuance certification from Climate Bond Initiative, London
 REC Green Bond Framework
 Certificate from Climate Bond Initiative, London

3. 1. Tax Free Bond:
ISIN
Bond
Tenure
(Yrs)
Face
Value
Allotement
Date Amount
Interest
Rate
Maturity
Amount
Int. Payment
Date
(Annually)
INE020B07GG9 10 1000 27-Mar-12 683.91 7.93%
1st July
INE020B07GH7 15 1000 27-Mar-12 155.77 8.13%
INE020B07GU0 10 1000 27-Mar-12 1,934.96 8.12%
INE020B07GV8 15 1000 27-Mar-12 225.37 8.32%
INE020B07GW6 10 1000000 21-Nov-12 255 7.21% 21st
NovemberINE020B07GX4 15 1000000 21-Nov-12 245 7.38%
INE020B07GY2 10 1000 19-Dec-12 773.64 7.22%
1st December
INE020B07GZ9 15 1000 19-Dec-12 391.67 7.72%
INE020B07HM5 10 1000 19-Dec-12 405.38 7.38%
INE020B07HN3 15 1000 19-Dec-12 446.66 7.88%
INE020B07HO1 10 1000 25-Mar-13 49.99 6.88%
1st December
INE020B07HR4 10 1000 25-Mar-13 31.36 7.38%
INE020B07HP8 15 1000 25-Mar-13 5.11 7.04%
INE020B07HS2 15 1000 25-Mar-13 44.6 7.54%
INE020B07HQ6 20 1000000 29-Aug-13 209 8.01%
29th August
INE020B07HT0 20 1000000 29-Aug-13 1,141.00 8.46%
INE020B07HU8 10 1000 24-Sep-13 257.21 8.01%
1st December
INE020B07HV6 15 1000 24-Sep-13 317.85 8.26%
INE020B07IC4 10 1000 24-Sep-13 1,721.20 8.46%
INE020B07IF7 10 1000 24-Sep-13 1,089.06 8.71%
INE020B07ID2 15 1000 05-Nov-14 16.4 8.37%
INE020B07IG5 15 1000 05-Nov-14 38.88 8.62%
INE020B07IE0 20 1000000 05-Nov-15 105 8.18%
INE020B07IH3 20 1000 05-Nov-15 45 8.54%
INE020B07J07 10 1000 05-Nov-15 290.26 8.19%
INE020B07J07 10 1000 05-Nov-15 300 8.44%
11179.28 7.94%
The debt under this category was issued as public offer and private placement. As all the bonds
are floating interest rate bonds, so the interest rates are fluctuating. The highest interest rate
offered in this category is 8.54% pa. and the average interest rate is 7.94% pa.
Total amount of debt raised under this category is amounting Rs. 11179.28 Crores

4. 2. Infrastructure Bond
Category Series
Bond
Tenure
Face
Value
Allotement
Date
Amount
Int
Rate
Int
Payment
Infrastructure
Bonds 2010-
11 (Lock in
period till -
31.03.2016)
Option-I : 10 Years
with Annual Int.
Option (With Buyback
Option after 5/6/7/8/9
Years)
10 5000 31-Mar-11 218.73
8.00%
31st March
Option-II : 10 Years
with Annual Int.
Option (Without
Buyback Option)
8.10%
Option-I : 10 Years
with Annual Int.
Option (With Buyback
Option after 5/6/7/8/9
Years) - Revised Rate
8.20%
Option-II : 10 Years
with Annual Int.
Option (Without
Buyback Option) -
Revised Rate
8.20%
Infrastructure
Bonds 2011-
12 (Lock in
period till -
15- 02-2017)
Option-I : 10 Years
with Cumulative Int.
Option (With Buyback
Option on 16.02.2017)
10 5000 15-Feb-12
157.59
8.95%
15th
February
(except for
cumulative
options
where int
will be paid
on
redemption)
Option-II : 10 Years
with Annual Int.
Option (With Buyback
Option on 16.02.2017)
Option-V : 10 Years
with Cumulative Int.
Option (Without
Buyback Option)
Option-VI : 10 Years
with Annual Int.
Option (Without
Buyback Option)
Option-III : 15 Years
with Cumulative Int.
Option (With Buyback
Option on 16.02.2019)
15 5000 15-Feb-12 9.15%

5. Option-IV : 15 Years
with Annual Int.
Option (With Buyback
Option on 16.02.2019)
Option-VII : 15 Years
with Cumulative Int.
Option (Without
Buyback Option)
Option-VIII : 15 Years
with Cumulative Int.
Option (Without
Buyback Option)
This Long-term Infrastructure Bonds are issued as unsecured, redeemable, and non-convertible
debentures. These bonds are of 10 years maturity and are called for buyback under the notice
dated 31st January 2019. The Redemption date is 31st March 2019.
3. Taxable Bonds
These is the series of short term taxable bonds secured / unsecured, non-cumulative taxable,
non-convertible private placement bonds.
Under this category, company raise the highest amount of Rs. 132357.58 Crores. Also the
highest coupon rate is offered of 11.15% for the 30 days maturity bond. There are total of 75
different bonds instrument issued by company in last 2 years.
Source: https://www.recindia.nic.in/uploads/files/Isin-wise-Inst-Bonds-310318.pdf
4. Capital Gains Tax Exemption Bonds Series-XII
 Issue size: Rs. 1000 Crore plus green shoe option to retain the oversubscription
 Face value: Rs. 10,000/- per bond
 Issue price: Rs. 10,000/- per bond
 Coupon rate: 5.75% annually
 Issue date: Issue Opening Date: April 2, 2018, Issue Closing Date: March 31,
2019 (at the close of the banking hours) or at a date as may be decided by REC
in its absolute discretion.
 Mode of subscription: Private Placement
 Interest payment date: Annually on June 30 of each year
 Tenure: 60 Months

6. 5. Foreign Currency Bonds
This is the upcoming category and source of funding by issuing following types of bonds:
 Post-issuance certification from Climate Bond Initiative, London
 REC Green Bond Framework
 Certificate from Climate Bond Initiative, London
Source: https://www.recindia.nic.in/uploads/files/post-issuance-certification-climate-bonds-
dt120918.pdf
Certificate of REC Global Green Bonds:
https://www.recindia.nic.in/uploads/files/ClimateBonds-Certificate-Rural-
ElectrificationCorporationLtdJune2017.pdf
Capital Debt Repayment Capacity
1. The level of EBITDA is important to assess the debt capacity as companies with higher
levels of EBITDA can generate more retained earnings to repay their debt. Hence, the
higher the EBITDA level, the higher the debt capacity.
The total revenue (EBITDA) for the year ending 31st March 2018 was Rs. 22,440
Crores which is approx. 164 times increased in last seven years. On the other hand,
from 2015-16 to current year, the EBITDA is constant, but the long-term debt is
increased by approx. 17.5%.
2. Credit metrics are extremely useful to determine debt capacity as they directly reflect
the book values of assets, liabilities, and shareholder equity.
Debt Equity Ratio 4.69 4.49 5.07 5.31 5.45
Long Term Debt Equity
Ratio
4.53 4.49 4.85 5.28 5.33
Interest Coverage Ratio 1.50 1.66 1.56 1.63 1.65
Total Debt to Owners
Fund
4.69 4.49 5.07 5.31 5.45
Financial Charges
Coverage Ratio
1.50 1.66 1.56 1.63 1.64
Financial Charges
Coverage Ratio Post Tax
1.34 1.46 1.39 1.44 1.47

7. The above ratios shows the solvency and the capacity of company to repay long term
borrowings. According to ratios, it can be said that company’s repayment capacity is
lowering year by year. It is seen that company increases is long term borrowings from
the last 3 years but its net revenue generation is decreasing.