Indian power utility issues $300m masala green bond

The transaction forms part of NTPC's plans to issue $4bn of medium-term notes to fund its solar and wind projects in India.

NTPC, India's largest energy conglomerate, has raised INR20 billion ($299 million; €269 million) in green masala bonds to finance renewables projects in India. 

The masala bonds, or Indian rupee-denominated offshore debt, are the first issued by the state-run power utility. They form part of the company's previously announced $4 billion medium-term note programme. 

The bonds, which will be listed on the Singapore and London stock exchanges, have reportedly attracted institutional investors such as BlackRock, the government of Singapore and Bluebay.

NTPC said its notes will mature in August 2021, with all principal and interest payments to be made in US dollars. They carry a coupon of 7.375 percent per annum payable annually, according to a filing at the stock exchanges.  

Credit rating agencies S&P and Fitch rated the bonds BBB minus. 

The non-profit Climate Bonds Initiative commented that the issuance is “a perfect example of using a fossil fuel balance sheet to finance renewables, from a company who aims to be the world’s largest and best power producer”.   

Last September, the Reserve Bank of India issued guidelines allowing Indian corporates, non-bank financial corporations, real estate investment trusts and infrastructure investment trusts to issue masala bonds. Higher borrowing costs, due to Indian tax laws, had however deterred would-be issuers to proceed. 

But masala bonds registered a success last month, when Housing Development Finance Corporation, India’s largest mortgage lender, became the first Indian company to sell the security, raising about $450 million.