NTPC raises $300 mn on LSE with Green Masala Bonds

State-owned energy major NTPC raised $300 million (Rs 2,000 crores) with a 7.48 per cent annual yield with the launch of its 'Green Masala Bond' on the London Stock Exchange (LSE) on Thursday. NTPC's bond issue was described as the "first-ever Indian quasi-sovereign to issue a Masala Bond," the proceeds from which will be invested in the renewable energy market as it seeks to add more wind and solar power projects to its portfolio.

"NTPC's landmark independently certified green Masala bond listing, the first Masala bond by an Indian quasi-sovereign issuer, represents another historic event for Indian finance," said Nikhil Rathi, CEO of London Stock Exchange plc and director of International Development at the London Stock Exchange Group.

"We are honoured to have been chosen to support NTPC access rupee-based financing in London's international capital markets, reinforcing India's ambitions to generate 175 GW of renewable energy by 2022. "London Stock Exchange has in recent weeks hosted landmark Indian issuances by Axis Bank and HDFC and today we are delighted to host the world's first independently certified green Masala bond by NTPC. "This cements London's position as the listing venue of choice for a variety of Asian issuers, from quasi-sovereign to supranational institutions, municipals and private companies. 

"We are excited about continuing to build this market with Indian partners and authorities over the long-term, underlying the success of the India-UK Financial Partnership," he added. The listing follows the visit of power minister Piyush Goyal to the UK earlier this year to strengthen UK-India collaboration on power and renewable energy. It also builds on the announcements made by Prime Minister Narendra Modi to list $1 billion equivalent of Masala bonds in the UK, made during his visit here in November, 2015. Masala bonds are rupee-denominated bonds issued to overseas buyers. As many as 30 offshore Indian rupee bonds have listed in total on the LSE, raising equivalent to approximately $3.5 billion, according to one of the world's leading stock exchanges.

The placement of rupee-denominated offshore bonds for funding renewable projects, or "green masala" bonds, by NTPC on August 3, will pave the way for developing the offshore rupee bond market (or "masala" bonds) for companies, according to S&P Global Ratings. The India-based power generator's issuance is the first public placement of masala bonds by a corporate, after Adani Transmission Ltd raised Rs 5 billion in masala bonds from Credit Suisse AG in a private transaction.

NTPC is considered a benchmark credit by some investors for pricing other corporate bonds from India. "We believe falling bond yields globally are a crucial factor in achieving convergence on pricing of masala bonds -- something that has been elusive in the past," said S&P Global Ratings credit analyst Abhishek Dangra.