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The K Raheja Corp backed Mindspace Business Parks REIT (Mindspace REIT) has become the country's first REIT to issue commercial papers after SEBI gave its approval for the same in September 2022. According to its BSE filing, the company has issued commercial papers worth Rs 100 crores for a tenure of 3 months at an interest rate of 7.2 per cent per annum. The commercial papers issued by Mindspace REIT has received a credit rating of A+ by CRISIL. According to the CRISIL website, the plus sign for ratings is reflective of its comparative standing within the category.
Commercial paper is a type of unsecured short-term debt instrument. It is commonly used by companies to meet working capital requirements and short-term liabilities. They are usually issued at a discounted rate and mature at face value. The maturity tenure can range between 1 to 270 days. Mindspace REITs intends to use the funds raised by these commercial papers towards the working capital requirements its Asset SPVs.
At the time of its IPO, 100% of the Trust’s borrowings were in the form of Asset SPV level bank borrowings. Over the last two years the Trust has diversified its lender portfolio and reduced its borrowing cost via multiple fixed-cost debenture issuances. As per its quarterly results published earlier this year, the company’s net debt stood at Rs 4,4650 crores, with a net debt to market value of 16.8% as of 30th September 2022.
As part of its larger strategy, the Trust is looking to further diversify its lender base while optimising its borrowing costs. It also intends to explore opportunities to raise funds via the issuance of green bonds. A green bond is a fixed-income instrument designed to support specific climate-related or environmental projects. They usually come with tax incentives. The concept of green bonds is part of a larger trend in socially responsible and environmental, social and governance (ESG) investing.
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