NTPC has raised $500 million through a 10-year US dollar denominated bond offering in the US bond market. The transaction has been done as part of the $2-billion Euro Medium Term Note (EMTN) programme of the company.
Coupon for the NTPC bond was fixed at 4.75 per cent and the instrument will yield 4.764 per cent per annum for investors.
For the latest bond offering, as much as 62 per cent of the investors were Asian institutional investors, European investors 31 per cent and US offshore accounts for seven per cent.
This NTPC bond offering is the first US dollar bond issuance by an Indian public sector company in 2012, sources close to the developments said.
It is also the first foreign currency borrowing by an Indian corporate after the recent Government move to cut the withholding tax on interest payments to 5 per cent from 20 per cent.
Citigroup was the joint book runner for the latest NTPC bond offering. This is the second consecutive US dollar bond offering led by Citi for NTPC.
“We see the reduction in withholding tax to 5 per cent as a key driver for increased issuance activity in the USD bond markets by Indian corporates. NTPC, a leading Indian corporate, was the first to take advantage of this move and received a very positive response.
The issue was oversubscribed by over eight times. This certainly sets the right tone for other Indian corporates to follow,’’ said Rajiv Nayar, Head of Capital Markets Origination at Citi India.
NTPC has so far including the latest $ 500 million drawn down $1.35 billion under the EMTN programme. While $350 million was raised in 2006, the company had also raised $500 million last year.
External commercial borrowings
To enable low-cost foreign borrowings by Indian companies, the Government had recently dispensed with the need for case-by-case approval for External Commercial Borrowings, so long as they broadly conform with general loan agreements.
This will be allowed for borrowings under a loan agreement or by way of issue of long-term infrastructure bonds that comply with the ECB regulations administered by RBI, Finance Minister P. Chidambaram had said.