STATE-OWNED Rural Ele­c­trification Corporation (REC) will mobilise $400 million (about Rs 1,849.6 crore) debt

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in Japan, Hong Kong and Singapore markets in a fortnight.

REC will raise the debt through an overseas borrowings issue in the three countries, said chairman and managing director JM Phathak. The $200-million ECB issue with green shoe option of up to $400 million is part of REC’s Rs 28,000 crore borrowing programme for 2010-11.

The company plans to raise $1 billion (about Rs 4,600 crore) through external commercial borrowings in FY11. Phat­hak said ECB issues would help the company in raising cheaper debt. In previous years, REC sourced just three per cent of its borrowings via ECBs.

The mandate to manage the $400 million ECB issue has been given to Bank of Tokyo Mitsubishi UFJ (BTMU) and State Bank of India (SBI).

BTMU and SBI have underwritten the issue with commitment of $100 million each. Besides, Mizuho Corporation Bank and Sumitomo Mitsui Banking Corporation are inclined to invest $75 million and $50 million respectively, REC director (finance) HD Khunteta said.

“REC has already built a book size of $325 million and is hopeful of finally increasing this further,” he said. The issue is open till August 20.

REC expects to raise the money at 176 basis points over Libor. This is against domestic debt funds available at 200-225 basis points over Libor.

The company’s annualised cost of lending is around 11.30-11.40 per cent, Khunteta said. REC has non-performing assets at a nominal Rs 2 crore on an order book of Rs 70,000 crore.

The company reported 24 per cent increase in net profit at Rs 587 crore in the first quarter of this financial year against Rs 471 crore in April–June 2009.