NHPC Raises Rs 750 Cr at 0.30% Lower Rate for 10 Yrs

Budget reactions

State-owned NHPC Ltd has raised Rs 750 crore on Thursday through the private placement of bonds at a very competitive interest rate of 6.80 percent per annum.

Further, the company has raised the loan amount for a period of 10 years. Its coupon rate is 6.80 percent, which is lowest in the current fiscal and lower by 30 bps or 0.30 percent than the prevailing AAA rated 10 years Bonds at 7.10 percent, the company said in a statement.

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Moreover, NHPC, which is the central public sector undertaking (CPSU) under the Power Ministry, has said that the issue structure consists of base size of Rs 500 crore with Green Shoe option of Rs 250 crore.

Under the Green Shoe option, the issuing company can allocate additional equity shares up to a specific amount. It is a clause in the underwriting agreement, which allows the company to sell additional shares to the public in case of higher demand.

NHPC also said that the issue was taken very overwhelmingly by the market and oversubscribed 3.87 times i.e. for Rs 2,899 crore amid coronavirus outbreak.

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Additionally, NHPC carries the highest credit credentials and rated ‘AAA’ by the leading rating agencies.

In another significant development recently, NHPC auctioned 2 GW of grid-connected solar projects in e-reverse bidding.

The tariff achieved during the auction was lowest at Rs 2.55 per unit to Rs 2.56 per unit, which is below the initially quoted tariff of Rs 2.71 per unit to Rs 2.78 per unit. The e-reverse bidding was conducted amongst 7 bidders with an aggregate capacity of 3,140 MW.

Among them, the successful bidders were SoftBank, O2 Power, EDEN Renewables, Axis Energy and Avaada.

This becomes more significant, as India achieved lower tariff in 2020 during the lockdown, as compared to the last year average rate, despite huge uncertainty in the global markets due to the spread of coronavirus pandemic.

A research firm working in the new energy finance space Bloomberg New Energy Finance (BNEF) termed the development as ‘investors’ confidence in India’s solar sector’ and suggested that developers have taken an optimistic view of the cost of financing these projects, even as a slowdown in India’s economic growth is expected.

The projects are expected to come online in 2022. This shields them from the supply constraints on equipment and labour currently caused by the lockdown.

Meanwhile, shares of the company closed on Thursday at Rs 20.80 apiece, down 1.65 percent, from the previous close on the stock exchange.