REC Successfully Raises Rs 5,000 Cr Via CBDT-Notified Zero Coupon Bonds

REC, a leading public infrastructure finance company, has successfully raised Rs 5,000 crore through CBDT-notified Zero Coupon Bonds (ZCB) at an effective yield of 6.25 per cent per annum. The bond issuance received overwhelming market response, with subscriptions soaring to seven times the issue size.

The ZCB issuance, rated AAA by all four major credit rating agencies—Care, Crisil, ICAR, and IRRPL—underscores REC’s strong financial position and market credibility. ZCBs are issued at a deep discount and redeemed at face value, offering investors the benefit of lower taxation. The redemption of these bonds on maturity is treated as long-term capital gains, attracting a lower tax rate of 12.5 per cent per annum.

This marks REC’s first issuance of CBDT-notified ZCBs since the financial year 2010-11, highlighting the company’s return to this form of fundraising. The net pay-in of Rs 2,712.50 crore against the bond issuance is scheduled for 3rd October 2024, and the bonds will be listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), further enhancing their liquidity.

With the successful completion of this bond issuance, REC continues to bolster its position as a key player in financing India’s infrastructure growth.