Renewable energy major ReNew Power Pvt. Ltd is planning to tap the offshore bond market to raise as much as $320 million to refinance local debt, the first such offshore bond issuance by an Indian renewable energy producer since covid-19 disrupted the markets in March.
On Friday, international rating agency Moody’s Investors Service said that it has assigned a Ba3 rating to the proposed 3.5-year USD senior secured notes of up to $320 million to be issued by India Green Energy Holdings.
India Green will use the proceeds from the dollar notes to subscribe to seven-year non-convertible debentures (NCDs) to be issued by 11 restricted subsidiaries (RG3), which are either wholly-owned or majority-owned subsidiaries of ReNew Power, the rating agency said. These subsidiaries comprise of solar and wind projects of over 400 megawatts (MW) capacity.
The proceeds from the NCDs will be used by the restricted subsidiaries to refinance existing debt, pay related transaction costs and fund a ₹750 crore loan (approximately $100 million) to ReNew Power.
ReNew Power is a seasoned participant in the dollar bond market. Earlier this year in January, the company raised $450 million through a dollar bond issuance.
After raising $20.7 billion in 2019, the most in six years, through offshore bond sales and another $10 billion in the first half of the calendar year 2020, the covid-19 pandemic slowed down Indian issuers plans to tap the offshore bond market.
Only a handful of companies have tapped the market in the last few months such as REC Ltd, UPL Ltd, Adani Ports and Vedanta Resources.
“The majority of issuance in the primary market currently is from investment-grade issuers and there is sufficient appetite for this category of paper as evidenced by the fact that the last few weeks, including the China holiday week, have been fairly busy,” said Shantanu Sahai, managing director and head of debt at Nomura India.
He added that non-investment grade paper has not seen much activity except for relatively higher rated (BB area) and/or repeat issuers coming to market. In those too, while appetite has been sufficient to get the deals printed, it has not seen the blockbuster reception that we saw in the past. Further, issuances from either new issuers or lower-rated HY issuers have been rare and will probably see investors adopting a cautious approach.”
“In general, it will be easier to do a BB or BB+ paper, anything lower than that will struggle at this point in time,” he added.
