NTPC raises USD 500 million through global bond sales
26 Sep 2012 2:08 AM GMT
State-run NTPC on Tuesday said that it has raised USD 500 million [over Rs 2,600 crore] through issue of bonds in international markets and the proceeds would be utilised for existing as well as new power projects.
The bond offering happened on 24 September, just a few days after the government lowered withholding tax on external commercial borrowings.
'This is the third offering under the company's USD 2 billion Medium Term Note MTN programme since it was set up in 2006, taking the cumulative amount raised under the programme to USD 1.3 billion,' NTPC said in a statement. According to the company, the offering was met with extremely strong demand and the transaction was oversubscribed within one-and-a-half hours of bookbuilding.
NTPC chairman and managing director Arup Roy Choudhury said the strong investor response to the bond offering reflects the company's superior credit quality. The speed of execution of the transaction demonstrates NTPC's responsiveness to market opportunities, he noted. 'This is a landmark transaction for the company with several firsts to its credit - it is the first corporate offering from India in the current fiscal, first bond offering after Government guidelines on lower withholding tax and has the lowest coupon on any bond offering by the company,' NTPC director [Finance] A K Singhal said.
The proceeds would bee used to ongoing and new power projects.
'In terms of geographical distribution, Asia took the bulk of the transaction at 62 per cent, with supplemental demand from Europe and offshore US accounts at 31 per cent and 7 per cent, respectively,' the statement said.
Funds accounted for 57 per cent of the transaction, followed by private banks [18 per cent], banks [14 per cent], insurance/pension [8 per cent] and others [three per cent]. Barclays Capital, Citigroup, Deutsche Bank and The Royal Bank of Scotland were the bookrunners for the offering. NTPC has an installed power generation capacity of 39,174 MW.
On Tuesday’s sale, which has a BBB- rating from both S&P and Fitch Ratings, is part of NTPC’s euro-bond medium term note [E-MTN] offering, sources said, adding that the money was raised in US dollars. An E-MTN means debt raised in US dollars but in which American resident investors are not allowed to participate.
On the successful completion of the bond sale, Rajiv Nayar, heads of capital markets origination division at Citi India, which was the lead-arranger for the deal, said, ‘We see reduction in withholding tax to 5 per cent as a key driver for increased issuance activity in the USD-bond markets by domestic corporates.
‘NTPC is the first to take advantage of this move and received a very positive response.The issue was oversubscribed by over eight times, at 4.75 per cent coupon for 10 years. This sets the right tone for other domestic corporates to follow,’ Nayar said.
He further said, this transaction marks the first USD bond issuance by a PSU this year, demonstrating the strength of the underlying credit and the strong management of NTPC.
Nayar further said this NTPC issue is the second consecutive USD bond offering by Citi for the company.
On the investor profile, a merchant banking source said Asian investors constituted 62 per cent, followed by Europeans at 31 per cent and US offshore investors accounted for 7 per cent.
Out of this fund managers constituted 57 per cent, bank, private banks 18 per cent, and i-banks 14 per cent, insurers and pension funds 8 per cent and others 3 per cent.
The bond offering happened on 24 September, just a few days after the government lowered withholding tax on external commercial borrowings.
'This is the third offering under the company's USD 2 billion Medium Term Note MTN programme since it was set up in 2006, taking the cumulative amount raised under the programme to USD 1.3 billion,' NTPC said in a statement. According to the company, the offering was met with extremely strong demand and the transaction was oversubscribed within one-and-a-half hours of bookbuilding.
NTPC chairman and managing director Arup Roy Choudhury said the strong investor response to the bond offering reflects the company's superior credit quality. The speed of execution of the transaction demonstrates NTPC's responsiveness to market opportunities, he noted. 'This is a landmark transaction for the company with several firsts to its credit - it is the first corporate offering from India in the current fiscal, first bond offering after Government guidelines on lower withholding tax and has the lowest coupon on any bond offering by the company,' NTPC director [Finance] A K Singhal said.
The proceeds would bee used to ongoing and new power projects.
'In terms of geographical distribution, Asia took the bulk of the transaction at 62 per cent, with supplemental demand from Europe and offshore US accounts at 31 per cent and 7 per cent, respectively,' the statement said.
Funds accounted for 57 per cent of the transaction, followed by private banks [18 per cent], banks [14 per cent], insurance/pension [8 per cent] and others [three per cent]. Barclays Capital, Citigroup, Deutsche Bank and The Royal Bank of Scotland were the bookrunners for the offering. NTPC has an installed power generation capacity of 39,174 MW.
On Tuesday’s sale, which has a BBB- rating from both S&P and Fitch Ratings, is part of NTPC’s euro-bond medium term note [E-MTN] offering, sources said, adding that the money was raised in US dollars. An E-MTN means debt raised in US dollars but in which American resident investors are not allowed to participate.
On the successful completion of the bond sale, Rajiv Nayar, heads of capital markets origination division at Citi India, which was the lead-arranger for the deal, said, ‘We see reduction in withholding tax to 5 per cent as a key driver for increased issuance activity in the USD-bond markets by domestic corporates.
‘NTPC is the first to take advantage of this move and received a very positive response.The issue was oversubscribed by over eight times, at 4.75 per cent coupon for 10 years. This sets the right tone for other domestic corporates to follow,’ Nayar said.
He further said, this transaction marks the first USD bond issuance by a PSU this year, demonstrating the strength of the underlying credit and the strong management of NTPC.
Nayar further said this NTPC issue is the second consecutive USD bond offering by Citi for the company.
On the investor profile, a merchant banking source said Asian investors constituted 62 per cent, followed by Europeans at 31 per cent and US offshore investors accounted for 7 per cent.
Out of this fund managers constituted 57 per cent, bank, private banks 18 per cent, and i-banks 14 per cent, insurers and pension funds 8 per cent and others 3 per cent.
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