NTPC has invited bids to raise external commercial borrowing (ECB) in the form of Tokyo Overnight Average Rate (TONA)-linked unsecured term loan in Japanese Yen (JPY) equivalent to $150 million (~₹12.4 billion) plus a greenshoe option of JPY equivalent to $600 million (~₹49.6 billion).

The proposed facility is being raised under the automatic route as permitted under the ECB guidelines of the Reserve Bank of India.

The last date to submit the bids is March 1, 2023. Bids will be opened on the same day.

Banks or financial institutions can submit bids individually or with other banks or financial institutions in a consortium of not more than three financial institutions. In the case of a consortium, the minimum underwriting commitment should be $50 million (~$4.1 billion).

The loan proceeds will be utilized toward capital expenditure for ongoing and new capacity addition programs and renewable energy projects, including hydro, coal mining, and refinancing existing ECBs.

The average maturity period of the loan will be seven years, and the door-to-door maturity will be ten years.

The repayment of loans will be in seven equal installments starting from the fourth year.

The loan should be unsecured, without any guarantee or letter of comfort from the government of India.

The leverage ratio of the loan should not be higher than 2:1, and the interest-serving coverage ratio should not be lower than 1.75:1.

As per the tender documents, NTPC retains the right to enter any hedge transaction about the proposed facility with any one or more banks of its choice.

Also, by giving at least 15 days of prior notice to the lender, the borrower may prepay the loan on any interest payment date in full or in part.

The signing of the agreement is expected to be completed on or before March 31, 2023, or any other date agreed upon by the company.

In 2021, NTPC had invited offers from banks and financial institutions to raise ₹50 billion (~$672 million) as rupee term loans.

Earlier, NTPC had entered into a foreign currency loan agreement with the Japanese government’s financial institution, the Japan Bank for International Co-operation.

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