NTPC defers $500 million bond issue as rates stay high

NTPC Ltd, India’s biggest power company, has put off plans to raise around $500 million through a dollar denominated notes in Singapore because of deteriorating sentiment for corporate bonds.

NTPC wanted to pay an interest rate of 9.25%, whereas investors sought 9.60%, said sources familiar with the development.
With interest rates elevated in India, NTPC was hoping for a better deal abroad.

“The market is not good right now. Investors are apprehensive and the situation in Greece is seen having an adverse impact on the bond market. We will have to wait for some time to raise money,” an NTPC official told DNA on Monday.

The company had organised roadshows for potential investors in Singapore and Hong Kong in the last week of May.

Barclays Capital, Citibank, Deutsche Bank and Royal Bank of Scotland were the book runners.

According to initial plans, the NTPC bond, with a maturity of 10 years, was to be listed on the Singapore stock exchange on June 4.

NTPC is planning to add 5,000 mw of capacity in the next fiscal for which it is raising funds from the domestic and international markets.

The company also has significant expansion plans for its coal- and gas-based power plants and it is also trying to acquire coal assets abroad.

NTPC has also sought the help of the Ministry of Power to raise funds through tax-free bonds in India.

The Ministry of Finance takes the final call on allowing government companies to raise funds through tax-free bonds.

NTPC has around Rs20,000 crore of cash reserves on its balance sheet.

With over 27 power generating stations across the country, NTPC’s total installed capacity is around 33,194 mw now.

The company is currently setting up projects with a capacity of 17,000 mw and it plans to produce 75,000 mw by 2017.