State-owned power company National Hydroelectric Power Corporation (NHPC) hit its target of raising Rs 1,000 crore via tax-free bonds within the first day of its public issue, which was launched on Friday. The company raised Rs 1,615 crore at the day’s close, according to the BSE.
The company launched its tax-free bond issue with a base size of Rs 500 with a greenshoe option of Rs 500 crore, aggregating to a total of Rs 1,000 crore.
NHPC bonds offer a retail coupon rate of 8.43% for the tenure of 10 years, 8.79% for 15 years and 8.92% for 20 years. Qualified institutional buyers, high net-worth individuals and corporates were offered a coupon rate of 25 bps below the retail rate.
Investment banking sources said the issue saw strong demand from QIBs, HNIs and corporates, while the company managed to raise about Rs 100 crore from retail investors. They added that the company will take a decision on whether to close the issue early or not as the retail quota was not filled. The quota for retail investors is 40% of the issue or R400 crore.
NHPC, along with Power Finance Corporation, were offering the highest yields compared to other tax-free bond issues in the market. The return being offered by PFC on its 20-year bonds is 0.17 bps higher than the recent issue by IIFCL, which offered 8.75%.
Tax-free bonds have seen strong appetite this year as the interest rates being offered are higher since the benchmark G-Sec bonds yield has risen by almost 150 bps since July 15 and is currently above 8.5%.
At Friday’s close, PFC raised 3,226 crore via its issue, while IIFCL raised R873 crore, according to the BSE website.
Rural Electrification Company raised Rs 3,500 crore through tax-free bonds last month.
The issue was originally planned to close on September 16, but closed earlier as shelf limit of the issue was reached.