NTPC raises $500 mn from overseas bonds

State-run NTPC has raised USD 500 million through an international bond issue that attracted commitments worth USD 2.7 billion from foreign investors. The latest fund raising from NTPC also indicates revival in overseas bond market and could also encourage more Indian entities to tap the route. The country's largest power producer , which has an installed capacity of 34,854 MW, would be using the proceeds for its existing and upcoming projects.

NTPC's bond issue elicited response from more than 230 investors, who made commitments to the tune of USD 2.7 billion.When contacted, NTPC Chairman and Managing Director Arup Roy Choudhury said response to the bond issue is a "recognition of the pre-eminent position of NTPC by the global investors and the confidence they repose in us to deliver on our promises".

As part of efforts to tie-up financing for its projects, NTPC last week had also inked a Rs 10,000 crore (over USD 2 billion) loan agreement with State Bank of India .

NTPC's upcoming projects include 1,320 MW Solapur plant and 4,000 MW mega thermal power plant in Kudgi, Karnataka. The entity plans to add 1,28,000 MW capacity by 2032.

Regarding the USD 500 million bond issue, NTPC Director (Finance) A K Singhal said, "In the backdrop of uncertain and volatile market conditions, the huge response of the investors to the offering is highly satisfying and reflects their confidence in the quality of NTPC credit".

In recent times, European debt woes and concerns about health of global economy have cast a shadow on fund raising activities in international markets. The power utility last tapped the overseas bond market in 2006 and had then mopped up around USD 300 million.

NTPC's issue of the USD 500 million senior unsecured fixed-rate 10-year bonds was completed on July 7. The bond sale was part of the company's USD 1 billion Medium Term Note (MTN) programme. These bonds have a coupon of 5.625 per cent per annum payable semi-annually and are due for maturity on July 14, 2021.

To woo investors, NTPC had conducted road shows in Hong Kong and London between May 30 and June 2. Post issue, Asia-based investors got 65 per cent allocation, followed by European investors (26 per cent) and US offshore accounts (9 per cent). In terms of investor type, asset and fund managers garnered 49 per cent of total issue.Book runners for the USD 500 million bond issue were Barclays Capital , Citigroup , Deutsche Bank and The Royal Bank of Scotland.