After a gap of two decades, NTPC has come up with tax-free bonds for Rs 1,000 crore with an option to retain over subscription up to Rs 750 crore.
The issue opens on December 3 and the overall issue size is for Rs 1,750 crore. The issue would close on December 16. However, it can be pre-closed if oversubscribed.
The interest on refund of bonds is 5 per cent per annum. Qualified institutional buyers (QIBs), corporates and HNIs would have a coupon rate of 8.41 per cent for 10 years; 8.48 per cent for 15 years and 8.66 per cent for 20 years.
For retail investors, the coupon rate will be 8.66 per cent for 10 years; 8.73 per cent for 15 years and 8.91 per cent for 20 years.
The issue is allocated in a ratio of 10 per cent for QIBs, 25 per cent for corporates, 25 per cent for HNIs and 40 per cent for resident retail investors.
The public sector power producer said that it has opted for raising debt through tax-free bonds because it is at least two per cent cheaper than domestic loans, while foreign borrowings have volatility factor.
Currently, NTPC gets domestic loans at around 10.25 per cent, while bonds have a coupon rate ranging from 8.41 per cent to 8.91 per cent.
The power producer has a planned capex of Rs 1.5 lakh crore during the 12th Five-Year Plan period. Of this, it would borrow 75 per cent or about Rs 1 lakh crore. Till now, it has tied up loans for about Rs 15,000 crore.
NTPC, which has 18 per cent of India's installed capacity and generates one-third of electricity, would use the proceeds of the bond issue for capital expenditure programme and service debts.
In the past three years and three months, NTPC has added more than 10,000 MW and has now an installed capacity of about 42,500 MW.
Currently, 19,500 MW of projects are under execution and the public sector company would soon place an order to procure equipment for 5000 MW, said Arup Roychowdhury, Chairman and Managing Director, NTPC.
These new projects include Tanda (1,320 MW); Darlipalli (1,600 MW) and North Karanpura (1,980 MW).