State-owned power major NTPC on Thursday said it has raised Rs 2,000 crore through issuance of green masala bonds in an overseas market that will be used for financing renewable energy projects.
“Issue of rupee-denominated Rs 20,000 million 7.375 per cent notes due 2021 payable in US dollars was launched pursuant to $4 billion medium term note programme,” NTPC informed BSE in a statement on Thursday.
Power Minister Piyush Goyal tweeted, “Congrats to NTPC for issuing first green masala bonds at 20 bps lower than domestic AAA benchmark.”
The 5-year bond has a coupon rate of 7.375 per cent and yield of the 7.48 per cent, which is 20 basis points lower than domestic AAA 5-year benchmark yield on Thursday.
The proceeds will be used for financing renewable projects and bonds will be listed in london and Singapore, he added.
According to statement, the bonds were priced yesterday and all payments for securing bonds will be settled by August 10.
The masala bonds are rupee denominated bonds where the investor takes the currency fluctuation risk while the borrowers don’t bear the risk. In dollar bonds, the borrower bears the currency fluctuation risk.
NTPC has drafted its business plan of capacity addition of about 1,000 mw through renewable resources by 2017. It has already commissioned 310 mw solar projects.
The ones under implementation include Anantpur in Andhra Pradesh, Bhadla in Rajasthan, Mandsar in Madhya Pradesh and 8 mw small hydro projects.
NTPC has envisioned 128 gw of total power generation capacity by 2032, with 28 per cent from renewable energy sources. The placement of rupee-denominated offshore bonds for funding renewable projects, or “green masala” bonds, by NTPC on August 3, will pave the way for developing the offshore rupee bond market (or “masala” bonds) for companies, according to S&P Global Ratings.
The India-based power generator’s issuance is the first public placement of masala bonds by a corporate, after Adani Transmission ltd raised Rs 5 billion in masala bonds from Credit Suisse AG in a private transaction.
NTPC is considered a benchmark credit by some investors for pricing other corporate bonds from India.
“We believe falling bond yields globally are a crucial factor in achieving convergence on pricing of masala bonds -- something that has been elusive in the past,” said S&P Global Ratings credit analyst Abhishek Dangra.