Road shows for the bond issuances in favour of Diamond II Ltd are scheduled to commence early next week, with Barclays, HSBC, Deutsche Bank, JP Morgan, BNP Paribas, and Standard Chartered Bank serving as joint global coordinators. DBS, Mizuho, MUFG, SMBC Nikko Securities, and Societe Generale are joint book runners, the sources said.
“Today, we have announced the mandate and by next week we will receive indications of interest, which will determine the actual size and other terms of the issue,” said Kedar Upadhye, Group CFO, ReNew Power.
Proceeds Will Mainly be used to Cut Debt
He declined to discuss the size of the issuance.
Individual banks could not immediately be reached for their comments.
The bonds will be senior secured instruments and guaranteed by REGP.
Proceeds from the bond issuance will primarily be used to reduce debt at REGP and its operating subsidiaries, with the remaining amount allocated toward funding future projects and investments. The bonds will have a tenor of three years and three months, and are expected to be priced around 8%, as per the first source.
ReNew Power’s existing, $450-million 5.875% senior secured bond due 2027 is currently trading at 7.6-7.9%, according to a bond trader.
Diamond II Ltd is a Mauritius-based fully owned subsidiary of REGP, which is listed on NASDAQ as ReNew Power’s parent company.
The last high-yield issuance in the dollar market from India was by Greenko, another renewable power producer, in March 2022. It raised $750 million through three-year bonds at 5.5%.
Fitch has assigned a ‘BB-‘ rating to the proposed USD notes. The rating agency anticipates that REGP’s EBITDA net leverage will remain above 6.0x over FY23-FY24 (FY22: 7.5x), before improving to around 5.2x by FY25, supported by its larger scale, improving receivables, and significant investment plans.
Fitch also noted that ReNew intends to use a portion of the proceeds from the notes to provide on-lending to three ReNew SPVs (Special Purpose Vehicles) that hold 244 MW of operating assets, which will be provided as security for external commercial borrowing (ECB) bonds and/or optionally convertible debentures (OCDs) in US dollars, with the assets covering at least 0.6x the amount of the US dollar notes.
ReNew Power currently has a total capacity of 13.4 GW, with 7.8 GW of operational capacity and 5.6 GWs committed. The company is confident in its ability to finance projects through a combination of debt, cash flow generation, and capital recycling. In the nine months of the financial year 2022-23, ReNew Power’s total revenue was $768 million.
Recently, the Canadian pension fund CPPIB has increased its stake to above 50% in REGP, the parent company of ReNew Power.
