Government-owned lender Indian Renewable Energy Development Agency (IREDA) has signed a loan facility with the State Bank of India Tokyo to raise JPY26 billion (~$172 million), including a greenshoe option of JPY10 billion (~$66.2 million) through external commercial borrowings.

The fundraise will include a five-year unsecured facility with a bullet payment at maturity. The landed cost, after hedging, is expected to be below 7%.

IREDA plans to use the facility to strengthen its global market presence.

Pradip Kumar Das, Chairman and Managing Director, IREDA, said, “This facility enables us to diversify our resource base and optimize costs, enhancing our lending support to India’s renewable energy sector.”

IREDA has an international credit rating of BBB- long-term and A-3 short-term with a stable outlook from S&P Global.

Recently, it issued its first-ever perpetual bonds worth ₹12.47 billion (~$144.5 million) at an annual coupon rate of 8.4%. IREDA also received ₹244.8 million (~$2.6 million) from the Income Tax Department toward partial relief for the assessment year 2011-12 related to certain disallowances.

In January this year, the agency announced plans to raise ₹50 billion (~$588.24 million) through a qualified institutions placement (QIP) of equity shares. The QIP aims to limit the Government of India’s maximum shareholding dilution in IREDA to 7% in the post-issue paid-up equity capital.

IREDA also raised ₹9.1 billion (~$106.16 million) by issuing privately placed subordinated Tier II bonds. This financing is for a 10-year tenure at an annual coupon rate of 7.74%. It aims to use the funds to enhance its Tier-II capital to increase its net worth and capital risk-weighted assets ratio.

The agency reported an increase in loan approvals and disbursements for the year ending December 31, 2024. Loan approvals surged to ₹310.87 billion (~$3.6 billion), marking a 129% increase from 2023. The sharp rise in loan approvals and disbursements reflects increased demand for financing renewable energy initiatives in the government and private sectors.