REC raises Rs 5,000 crore through zero coupon bonds

New Delhi: REC Limited has successfully raised Rs 5,000 crore through CBDT-notified Zero Coupon Bonds (ZCBs) with an effective yield of 6.25 percent per annum. The bond issuance was met with strong demand, being oversubscribed seven times its original size.

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These ZCBs, issued at a deep discount and redeemed at face value, offer tax benefits to investors due to their CBDT notification. When the bonds mature, the redemption is classified as long-term capital gains, subject to a lower tax rate of 12.5 percent per annum.

All four major credit rating agencies—CARE, CRISIL, ICAR, and IRRPL—assigned a top rating of AAA to the issuance. The last such issuance by REC was in the financial year 2010-11.

The bonds, with a net pay-in of Rs 2,712.50 crore, are scheduled for settlement on September 3, 2024, and will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

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