REC Limited has triumphantly secured Rs 5,000 crore through CBDT-sanctioned Zero Coupon Bonds (ZCB), accruing an impressive effective yield of 6.25% per annum. The overwhelming market reception saw these bonds oversubscribed by a staggering sevenfold against the original issue size.
Rated AAA by prominent Credit Rating Agencies—namely CARE, CRISIL, ICAR, and IRRPL—the bond issuance bolstered its credibility and market allure. Zero Coupon Bonds, often issued at a substantial discount, are redeemed at their full face value upon maturity. Given their CBDT classification, these ZCBs present a considerable fiscal advantage to investors, as the redemption sum, classified as long-term capital gains, is subject to a notably reduced tax rate of 12.5% per annum.
This marks REC’s first issuance of CBDT-approved ZCBs since the fiscal year 2010-11, underscoring its significant return to the zero-coupon bond arena. The net pay-in for this latest issuance, amounting to Rs 2,712.50 crore, is scheduled for 03rd September 2024.
To enhance liquidity and investor accessibility, these bonds are slated for listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), thus ensuring robust secondary market participation.
