Tata Power, the country's largest private sector power producer with an installed generation capacity of 2,278 mw, has raised Rs. 600 crore through a private placement of debentures at a yield-to-maturity of 7.1 per cent. |
The company will utilise the proceeds from the issue for its expansion in the power sector and to lower its cost of capital. |
Tata Power has been able to raise funds at an attractive interest rate, which is just about two basis points higher than the prevailing yields on government paper of similar maturity at 6.93 per cent. |
This follows the new trend among corporates to privately place their paper with investors instead of going to the market. The usual yield differential between corporate bonds and government securities is about 60-70 basis points. |
Tata Power's debentures bear a coupon of 4 per cent for the first two years and, thereafter, 6 per cent for the remaining tenure of nine years. The maturity of the debenture is 11 years. |
The debenture will be entitled to a redemption premium and will be repaid back-ended, with 30 per cent of the investment to be paid in the 9th year, 40 per cent in the 10th year and 30 per cent in the 11th year. Barclays Capital were the arrangers for the issue, according to press release. |
Tata Power has presence in all areas of power sector - thermal, hydro, solar, transmission and distribution. |