Cross-border cooperation: how India’s REC and Italy’s SACE’s structured a JPY green loan facility
Published: Feb 2025
Best Funding Solution
Highly Commended Winner
REC Limited
Photo of Hemant Kumar and Koshal Puri, REC Limited and Aziz Parvez, Bank of America.
Sanjay Kumar
Executive Director (Finance)
Supreet Pandya
Deputy General Manager
Incorporated in 1969, REC Limited (REC) is a non-bank financial company operating under the administrative control of India’s Ministry of Power. It offers financial services to the Indian infrastructure sector with the goal to help facilitate investment and growth of rural electrification projects, including flagship schemes by the government of India.
in partnership with
The challenge
REC is a leading financier for renewable energy and energy transition projects. As part of its sustainable financing initiative, REC had implemented a ‘Green Finance Framework’ as a basis to issue green bonds, loans and other financial instruments, which are used to finance eligible green projects that are aligned to its sustainable values.
These green projects must meet the stated eligibility criteria and are subject to an evaluation process to ensure the proceeds are invested in renewable energy, clean transportation and energy efficient projects in a manner that is consistent with its sustainable values.
REC had been assessing ways to diversify its funding sources and avail itself of green financing solutions.
The solution
In Q323, REC met with SACE – the Export Credit Agency (ECA) of Italy – and set in motion a series of discussions that led to the inaugural SACE-backed green loan arrangement for India.
The deal, an 80% SACE-backed US$400m in JPY equivalent untied syndicated green loan facility, was closed in Q124, marking SACE’s first loan transaction in JPY.
For REC, the transaction complemented its overall financing strategy and enables the company to maintain the balance of its existing financing mix. It will use the green facility for financing eligible green projects in India.
Timing was key to the success of this deal.
The syndicate of banks comprised:
Crédit Agricole Corporate & Investment Bank: Facility Agent, Mandated Lead Arranger, ECA & Green Loan Coordinator
Lender
Bank of America: Mandated Lead Arranger and Lender
KfW IPEX-Bank: Mandated Lead Arranger and Lender
Sumitomo Mitsui Banking Corporation: Mandated Lead Arranger and Lender
Citi: Mandated Lead Arranger and Lender
Best practice and innovation
By working with SACE, the loan fully complements REC’s overall financing strategy and enables the company to maintain the balance of its existing financing mix. Additionally, the decision to peg the loan in JPY enables REC to capitalise on the favourable JPY benchmark interest rate, which helped lower the underlying cost of capital while maximising withholding tax (WHT) benefits for REC.
The transaction also comprises an FX element to convert JPY to INR.
It provides SACE with an opportunity to drive sales between Italian manufacturers and Indian companies in the renewable energy and green transportation sectors.
The partnership between SACE and REC is a first-of-its-kind collaboration between an Indian government entity and SACE, paving the way for similar green financing transactions in the Indian public sector landscape.
Companies like REC play an important role in helping India achieve its decarbonisation targets by delivering financing to companies operating renewable energy and energy transition projects in India.
Key benefits
Cost savings.
“This deal is a big step forward and a show of commitment by all involved parties to support the growth of green energy financing and sustainable projects in India,” concludes Sanjay Kumar, Executive Director (Finance).
Radhakrishnan, Shankar
Head of Trade Product Sales, Asia Pacific, Global Trade & Supply Chain Finance, Global Payment Solutions, Bank of America
REC Limited wanted to diversify its funding sources and avail itself of green financing solutions as it works towards cementing its position as a leading financier for green projects in India. The partnership with SACE complemented its overall financing strategy and also delivered the benefit of improved cost of capital by capitalising on favourable JPY benchmark interest rate and withholding tax benefits. Bank of America is pleased to be among the syndicate of banks to have facilitated this first-of-its-kind transaction between an Indian government-owned entity and SACE, helping India advance its decarbonisation targets.
in partnership with
The Adam Smith Awards Asia are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 406 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia
Please enter the email that you signed up with below. If your email is
connected to a member account, we will send you a reset link.
This website uses cookies and asks for your personal data to enhance your browsing experience. We are committed to protecting your privacy and ensuring your data is handled in compliance with the General Data Protection Regulation (GDPR).
