NTPC's Rs 1,000-crore bond issue opens today

Orders worth Rs 25,000 crore will be placed by March

Power generator NTPC Ltd is set to launch its Rs 1,750-crore tax-free bond issue on Tuesday. The proceeds would help fund its ongoing Rs 22,200 crore capital expenditure target for the current financial year, the firm said.

The bonds will have an issue size of Rs 1,000 crore with an option to retain oversubscription of up to Rs 750 crore. The public sector undertaking also announced it will place Rs 25,000 crore worth of orders to source equipment to set up 5,000 Mw capacity projects by March.

The interest on refund of bonds is five per cent per annum. Qualified institutional buyers, corporates and high networth individuals 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% for 10 years; 8.73% for 15 years and 8.91% for 20 years. The issue is allocated in a ratio of 10% for QIBs, 25% for corporates, 25% for HNIs and 40% for resident retail investors.

NTPC’s Executive Director (Finance), G K Sadhu said raising funds through bonds makes sense as it is cheaper than domestic loans.

“Also, foreign borrowings come with their own risk of volatility. We get domestic loans at around 10.2% while bonds have a coupon rate ranging from 8.41% to 8.91%,” Sadhu said at an interactive session of the company’s board of directors with the media.

The company wants to spend close to Rs 1.5 lakh crore during the current Plan period ending March 2017. Around 75% of this would be borrowed. NTPC has an installed capacity of 42,500 Mw, roughly 18% of India's total capacity, and generates 28% of electricity.

Chairman and Managing Director Arup Roy Chowdhury said around 19,500 Mw capacity of projects are under execution and the company would soon place orders to procure equipment for 5,000 Mw. The new projects include 1,320 mw Tanda, 1,600 Mw Darlipalli and 1,980 Mw North Karanpura project in Jharkhand.