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Informist, Wednesday, Dec. 11, 2024

 

--Sources: Nuclear Power Corp to raise up to INR 46 bln via 15-yr bonds 

--Sources: Nuclear Power Corp's 15-yr bond issue likely to open Monday 

 

By Sachi Pandey

 

MUMBAI – Nuclear Power Corp of India Ltd. is planning a comeback to the bond market after nearly 20 months, according to three sources aware of the matter. The state-owned power giant aims to raise up to INR 46 billion through bonds maturing in 15 years. 

 

According to sources, the company is likely to announce the details of the bond offering this week, with the bidding expected to take place on Monday. "They are deciding on dates, but the bidding is most probably on 16th (Dec. 16), so they will announce the details this week itself," a merchant banker said on the condition of anonymity. Once issued, the bonds are expected to follow a 'T+1' settlement cycle, with allotment likely on Tuesday.

 

The issue is said to have a base size of INR 20 billion, and a greenshoe option of INR 26 billion. The bonds are expected to carry a 15-year maturity, with a put and call option exercisable after 10 years from the date of allotment. This would give investors the flexibility to exit or the issuer the right to redeem the bonds early, depending on market conditions.

 

The bonds have been rated 'AAA' by CRISIL Ratings. 

 

Market participants expect the bonds to carry a coupon rate in the range of 7.10% to 7.20%, reflecting the limited supply of bonds in the market, which could result in strong demand. "NPCIL is coming after a long time, and there's a limited supply of bonds in this segment, so the demand is expected to be high, and the levels can go really low," the merchant banker added.

 

The yield on the 15-year benchmark 7.23%, 2039 bond is currently at 6.8471%. If the coupon is to be between 7.10-7.20%, the bond will be only 13-23 basis points over the benchmark levels.

 

Despite the anticipated demand, the structure of the bonds, particularly with both put and call options, may have an impact on the final coupon. "If the structure was more straightforward, without both call and put option, the coupon might have been lower. But with both options, it becomes a little complex and could affect the final pricing," a source at a large private sector bank said. 

 

The source added that while a call or a put option on its own would be acceptable, a combination of both could be seen as less favourable for investors looking for long-term stability. 

 

Details of the arrangers for the upcoming issuance are yet to be disclosed, though several merchant bankers are expected to participate in the deal.

 

While this is the first tranche of issue by the company in the current financial year, the company's board had on Aug. 9 approved a plan to raise up to INR 96 billion through non-convertible debentures on a private placement basis within 2024-25 (Apr-Mar).

 

The last time Nuclear Power Corp tapped the debt market was in March 2023. The company had then raised INR 25 billion through bonds maturing on Mar 20, 2038 at a coupon of 7.70%. 

 

With the company's strong government backing and a solid credit rating, the bond issuance is likely to draw considerable interest. However, market participants will closely watch how the dual put and call option structure affects the final coupon, as well as the overall investor appetite, sources said.  End

 

Edited by Avishek Dutta

 

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