Bank of America has extended approximately Rs 8 billion to ReNew Power, in the first local project financing deal by the lender in the renewable energy sector.
The five-year rupee-denominated green loan facility will help the company lower funding costs as the proceeds will primarily be used to prepay an existing offshore loan before its scheduled repayment date. The onshore loan could be priced at a spread of 200-250 basis points over three-month treasury bills, which yielded 6.45 per cent in the Reserve Bank of India’s latest primary auction. This is a refinancing facility which will help the company save funding cost of about 200 basic points. The credit line is linked to two dedicated solar projects in India. Cash flows from these two projects will be used to repay the loan.