NTPC raises $500m from overseas bonds at 4.75% coupon
Largest power producer NTPC on Tuesday raised USD 500 million from overseas bond sales at 305 basis points over the US treasury, making it one of the cheapest 10-year dollar bond sales by a domestic corporate.
The issue, which was oversubscribed a full eight times, is also the first one after the government last week relaxed external borrowing route by slashing the withholding tax on such funds to just 5 from 20 percent. This is also the first by a government-owned company this year.
According to merchant banking sources, which included Citi, RBS, Barclays and Deutsche Bank, today's sale is part of the USD 2 billion overseas borrowing (medium term note) that the state-run power utility had planned way back in 2006, when it had mopped up USD 350 million in 10-year dollar money through unsecured bonds and another USD 500 million last year. NTPC officials could not be contacted immediately.
On the pricing, an i-banking source said the final pricing was fixed at 305 basis points over the US treasury (which is 0.25 percent), resulting in a yield of 4.764 percent per annum.
This is significant as the guidance was 325 bps over the US T-bills, and the final payable coupon is fixed at 4.75 percent per annum, sources said.
A merchant banker said, the huge response to the issue further reiterates that foreign investors are only happy to buy quality debt from domestic corporates.
All the recent issues, kicked off by SBI by raising USD 1.25 billion in July at record low rates, which
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