Fitch Ratings has assigned India-based REC Limited's (BBB-/Stable) proposed Japanese yen-denominated senior unsecured notes a rating of 'BBB-'.

The proposed notes will be issued from REC's existing USD10 billion global medium-term note programme. The net proceeds will be used for financing green projects consistent with REC's Green Finance Framework in accordance with the approvals granted by the Reserve Bank of India and the external commercial borrowing guidelines.

Key Rating Drivers

The proposed notes are rated in line with REC's Long-Term Issuer Default Rating (IDR) on the basis that they will be issued under REC's programme and will constitute its direct, unconditional and unsecured obligations and rank pari passu with all its other outstanding unsecured and unsubordinated obligations.

Derivation Summary

Fitch assess REC under its Government-Related Entities Rating Criteria, factoring in the company's strong linkage with the government and the government's incentive to provide support, with a high overall support score of 50. This results in the equalisation of REC's IDR with that of the Indian sovereign (BBB-/Stable), irrespective of the company's Standalone Credit Profile.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

A positive change to the company's IDR will result in a similar change to the proposed notes.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Negative rating action on the company's IDR will result in a similar change to the proposed notes.

ESG Considerations

Fitch does not assign ESG scores for REC as the ratings and ESG profile are derived from the parent. ESG relevance scores and commentary for the parent entity, India, can be found here www.fitchratings.com/entity/india-80442259

Issuer Profile

REC was established in 1969 and is a non-banking financial company registered with the Reserve Bank of India. Itis under the administrative control of India's Ministry of Power. REC is responsible for lending to the power, logistics, and infrastructure sectors, primarily to government-sector borrowers.

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