Marking a First

NTPC lists $6 billion MTN on India INX

NTPC Limited, the country’s largest power generation company, listed its $6 billion (Rs 400 billion) medium-term note (MTN) programme on the India International Exchange (India INX) at the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City (GIFT City). With this, NTPC became India’s first quasi-sovereign company to list on the exchange. The listing, which was done on January 24, 2018 on the Global Securities Market (GSM) of the exchange, will help the company raise funds at lower costs from international investors and allow foreign investors to access good quality Indian debt.

“For the first time in India, we have the opportunity to reach out to international investors to raise funds using a wide variety of products and currencies in a similar manner as available in other international markets,” says Gurdeep Singh, chairman and managing director, NTPC Limited.

India INX, the country’s first international exchange, was inaugurated in January 2017 by Prime Minister Narendra Modi, who set forth the vision for the exchange to become a listing destination for issuers from India and the region. India INX has one of the world’s most advanced technology platforms with a turnaround time of four microseconds and operates for 22 hours a day to allow international investors and non-resident Indians to trade from anywhere across the globe. The GSM of the exchange went live on December 8, 2017 with the publication of its debt listing framework. Prior to the listing on India INX, in November 2017, Moody’s Investors Service upgraded the rating on NTPC’s senior unsecured MTN programme from (P)Baa3 to (P)Baa2, that is, from positive to stable. The upgrade was due to the upward revision in the Indian sovereign rating.

NTPC first established the MTN programme in 2006 to facilitate the raising of debt funds on a regular basis from international debt capital markets. Funds raised through this programme are used to part-finance capital expenditure on new and ongoing projects, coal mining projects, renovation and modernisation of power stations and other end uses.

During 2016-17, NTPC raised Rs 20 billion ($305 million) and Euro 500 million ($534.5 million) through external commercial borrowings via green masala bonds (August 2016) and eurobonds (January 2017) respectively under the $4 billion MTN programme. The green masala bonds have a coupon of 7.375 per cent with a five-year tenor and the proceeds are being used to finance NTPC’s renewable energy projects. These were, in fact, the first such bonds by an Indian company with dual listing on the Singapore and London Stock Exchanges. Meanwhile, the eurobonds, issued at a coupon of 2.75 per cent, were the first ever 10-year euro bond issuance by an Asian utility and was listed on the Frankfurt Stock Exchange. The two issuances marked the eighth and ninth offerings under the MTN programme since it was set up in 2006, taking the cumulative amount raised under it to close to $4 billion. As a result, in April 2017, the NTPC board approved the upsizing of the MTN programme to $6 billion to be able to further raise debt from overseas investors.

NTPC reported a 4.4 per cent fall in profit during the third quarter of 2017-18 to Rs 23.61 billion from Rs 24.69 billion in the corresponding period of the previous year. However, its total revenue was up 5.6 per cent at Rs 210.88 billion during the quarter. Meanwhile, revenue and profit for the first nine months of 2017-18 increased by 5.4 per cent and 1.5 per cent to reach Rs 615.9 billion and Rs 74.18 billion respectively. The government, which continues to own a majority stake (62.3 per cent) in the company, sold 7 per cent stake through its two-day offer for sale to raise Rs 91 billion in August 2017.

The company has an installed capacity of about 51.4 GW and accounts for over 15 per cent of the country’s generation base. It plans to expand its capacity to 130 GW by 2032, comprising 91 GW of coal- and gas-based capacity, 32 GW of renewable capacity, 5 GW of hydro and 2 GW of nuclear power. It currently has close to 21 GW under construction, 5 GW under tendering,  27.5 GW with approved feasibility reports while around 25 GW is under feasibility.

NTPC’s annual capex has been rising consistently, from about Rs 200 billion in 2012-13 to over Rs 280 billion in 2016-17. In the coming years, huge capital will be required to realise its capacity addition goals. The recent listing of its MTN on India INX will allow NTPC to access foreign funds at lower costs to finance its expansion plans.

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