Moody’s downgrade of India ratings may marginally raise the cost of borrowings needed for the government’s Rs 90,000-crore bailout package for discoms but there will be no dearth of funds, power minister R K Singh told TOI on Tuesday.
“We are raising funds successfully. We are getting funds. Perhaps the rates may change a little (after the downgrade) because there is so much demand,” Singh said in reply to a query about the Moody’s impact on borrowings by state-run power sector lenders PFC and its subsidiary REC.
Executives working with the lenders said PFC has been raising 10-year funds at roughly 7.79 per cent. This is expected to rise to about 8 per cent. This may squeeze their margin as they will have to lend to discoms at a concessional rate with a two-year moratorium.
The real problem, however, is that PFC and REC may have to raise Rs 35,000 crore additional funds to pay back lenders as repayments from their borrowers stopped due to the EMI moratorium announced by the government.