Financial Daily from THE HINDU group of publications
Tuesday, Jan 13, 2004
Financial Daily from THE HINDU group of publications Tuesday, Jan 13, 2004 |
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Corporate
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Corporate Bonds Industry & Economy - Power NTPC plans euro bonds to raise $200 m Balaji C. Mouli
New Delhi , Jan. 12 NATIONAL Thermal Power Corporation is planning to approach the euro bond market to raise $200 million, with a repayment tenor of seven years. The funds will be used to finance its power generation capacity addition programme. This the first time that NTPC woul be going to the overseas bond market to raise funds. Several leading foreign banks have recently made presentations to NTPC, seeking the mandate to raise the funds. These include DSP Merrill Lynch, JP Morgan, Citigroup, Deutsche Bank, ABN-Amro, Standard Chartered, Bank of America and BNP Paribas. The company has decided to go in for a bond issue since it can be contracted at lower interest rates compared to loans from banks. Bond issue attracts wider interest from the investor community. In the case of syndicated or term loans, only banks lend. In the case of bonds, the investor community includes mutual funds and pension funds. Recently, ICICI Bank floated a bond issue with a tenor of 5 years. The funds were raised at a competitive rate of 145 basis points over the corresponding benchmark of US treasuries. NTPC has a capacity addition plan of 9370 MW during the Tenth Plan period (2002-07), which will require debt funding to the tune of Rs 40,000 crore. Debt funding has been tied up for Rs 20,000 crore.
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