Tata Power is raising USD320 million sustainability-linked loans from overseas lenders led by Bank of America.
The sustainability linked loans are usually as much as 25 basis points cheaper than regular loans. The company will use the proceeds to refinance and expand its power generation plants. The company’s subsidiaries will use the proceeds for refinancing their existing loans. It will not be used for new capacity addition. Tata Power is raising the debt via two international subsidiaries. One is a club loan where Bank of America is lending along with Sumitomo Mitsui Banking Corporation. Bank of America is also extending a term loan facility. Both the loans are in dollar denomination with a tenure of about three years. Additionally, the company can save upto 8 basis points if it does not invest in any new coal-based plant and builds 2GW of new renewable capacity every year.