NTPC is set to raise $500 million via dollar-denominated bonds at the pricing of 255 basis points over the 10-year US Treasury yields, bond market sources close to the deal said, adding that the coupon rate stands at 4.25%.
The pricing is 20 basis points lower than the initial price guidance for the issue which stood at 275 basis points over the 10-year US Treasury yield, market participants indicated.
Standard & Poor’s ratings services has assigned ‘BBB-‘ long-term issue rating to NTPC’s proposed drawdown under its $4 billion senior unsecured medium-term notes programme. HSBC, Barclays, Citi, Deutsche Bank and SBI Caps were the bankers to the deal, sources said.
“The issue carried almost negligible new issue premium and saw a considerable response from investors. Over 65% of the investors were from Asia, while the rest was from Europe, etc,” a banker close to the deal said.
The ‘Regulation S’ issue would be the first corporate offshore bond issuance out of India in the current calendar year. So far in 2016, only banks have issued bonds in offshore markets.
Meanwhile, the company is set to raise close to Rs 655 crore at a yield of 8.33% from the domestic debt market, market sources said, adding that bonds have tenure of five years.
In 2015, NTPC was looking to issue offshore rupee bonds or ‘masala’ bonds. The proposed masala bond issue was reportedly postponed because investors were looking for a yield that was higher than that in the domestic market, according to sources.
“In regard to masala bonds, we are waiting for the Budget and are hoping for some positive news as far as the witholding tax is concerned,” NTPC director-finance Kulamani Biswal said.
Offshore bond issuances have remained subdued since the beginning of this year due to persistent volatility in the markets. Although many players are believed to have enquired about the prospects of issuing bonds in the offshore markets, issuances have not materialised in considerable numbers.
The only major issue this year prior to NTPC’s was that of Exim Bank of India, where the lender raised $500 million in January. In 2015, companies and banks raised close to $8 billion via offshore bond issuances. The figure was less than half of what was raised in 2014 — a record figure of $18.6 billion.