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Fitch Affirms REC Limited at 'BBB-'; Outlook Stable Amid Strong Government Support

Updated: May 09, 2025 12:40

Image Source: Mint
Fitch Ratings has reiterated REC Limited's long-term IDR of 'BBB-', upholding a stable outlook. This rating is premised on the critical role of REC in the Indian power industry and the presence of strong government support, underpinned by ensuring financial health.
 
Credit Rating & Government Support
  • Fitch maintained REC's BBB- rating due to the country's finance requirements for the power infrastructure.
  • The Indian government has an indirect interest via Power Finance Corporation (PFC) to ensure policy synchronization and financial control.
Financial Performance & Loan Portfolio
  • The loan book of REC is healthy, with 90% assets tied to borrowers in the government sector.
  • Low non-performing assets (NPAs) give the company credit stability.
Debt Management & Liquidity Measures
  • REC is permitted to issue long-tenor, low-interest bonds like infrastructure and tax-free bonds to provide strong liquidity.
  • The government has offered direct financial assistance, such as a ₹100 billion term loan.
Strategic Contribution to Power Sector Reforms
  • REC has a significant role in India's power sector transformation, financing distribution companies and renewable energy schemes.
  • The funding by the company avoids liquidity disruptions, allowing continued infrastructure development.
Future Prospects & Stability Drivers
  • Fitch believes REC will remain financially resilient, supported by government policies and stable revenues.
  • The strategic role of the company in India's economic development supports its long-term stability.
This rating confirmation reflects REC Limited's sound financials, supporting its position in India's power sector financing.
 
Sources: Fitch Ratings, Fitch Ratings - USD Notes

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