REC Limited's Rs 5,000 Crore Zero Coupon Bonds See Massive Oversubscription

REC Limited, a Maharatna company under the Ministry of Power, successfully raised Rs 5,000 crore via Zero Coupon Bonds at a 6.25% yield per annum. The bonds were oversubscribed seven times. Rated AAA by top credit rating agencies, these bonds offer tax benefits and will be listed on BSE and NSE.

In a significant financial move, REC Limited, a Maharatna firm overseen by the Ministry of Power, has successfully raised Rs 5,000 crore through Central Board of Direct Taxes (CBDT) notified Zero Coupon Bonds (ZCB). The bonds offer an effective yield of 6.25 per cent per annum.

The issuance was met with overwhelming market response, being oversubscribed seven times the issue size. All four leading credit rating agencies, including CARE, CRISIL, ICAR, and IRRPL, granted the bonds a top-notch 'AAA' rating, adding more credibility to the financial offering.

Zero coupon bonds, issued at a deep discount and redeemed at face value, are particularly appealing as they offer tax benefits. The redemption of these CBDT-notified bonds is considered a long-term capital gain, subject to a significantly lower tax rate of 12.5 per cent per annum. This marks REC Limited's first issuance of such bonds since fiscal year 2010-11, and they will be listed on major stock exchanges BSE and NSE.

REC, which acquired Maharatna status in 2022, is involved in the full spectrum of power infrastructure, including generation, transmission, and renewable energy projects. The company has also diversified into non-power infrastructure sectors such as roads, metro rail, and IT communication, solidifying its position as a versatile financial entity.