Sterlite Grid Power Ventures Limited launched Rs 925 crore non-convertible debentures, marking it to be the first bond issuance by a private power transmission company in the country.
The debentures was issued for the its subsidiary East North Interconnection Company (ENICL) which is developing 450 km transmission network connecting eastern and north east region with the northern region.
The issue was rated AAA (SO) by CRISIL and India Ratings. The company in its statement said, IDFC, Kotak Mahindra Bank and DSP Blackrock subscribed to the issue on the day of the issuance.
The tenure of the bond is 17.5 years with a call option with the issuer at the end of 10th year, said the company. Industry experts said, with bonds being cheaper than loan, the bond issuance would give benefit of 1.5 per cent in rate of interest.
Country’s grid operator, Power System Operation Corporation Limited (POSOCO) has identified ENIC line as one of the ‘highest priority line’, as it will provide connectivity for the transfer of power from the generation plants in the North Eastern region, passing through Bihar, West Bengal and Assam. It will also address the issue of the power shortfall during non-monsoon months, in north east states especially Assam, said the company.
“We have always had a vision to help create a public debt market for privately developed infrastructure projects. We believe this will relieve some of the pressure from the banking system. Our ENICL transaction is a first step in this direction and will immediately reduce our borrowing cost” said Pratik Agarwal, vice chairman,” Sterlite Grid.
Credit rating agency India Ratings in its report on the power transmission sector said, operational power transmission assets in India are emerging as an attractive asset category for the private sector in infrastructure bond market.
“Power transmission is emerging as an attractive asset category for the private sector… operational transmission projects will emerge as ideal candidates for infra bond markets,” said the agency in its report dated October 2015.
In the past, state owned Power Grid Corporation of India Limited had issued bonds to raise funds from debt market. During this fiscal, it plans to raise Rs 12,500 crore by tapping bond market, said company officials last year. Earlier, it issued Rs 3,997.50 crore through its bond issue in the domestic market in FY12-13.
Transmission assets may create appetite among investors and it is a class of asset which is expected to deepen the infra bond market, given its stable and availability nature of revenue and a long licence tenure, India Ratings said in its report.
- Rs 925 crore non-convertible bond issuance by Sterlite Grid.
- Sterlite is India’s largest private developer of independent power transmission systems.
- This is the first bond issuance by a private power transmission company.
- In past, state owned Power Grid issued bonds in domestic market to tap debt funds.
- Proceeds to be used for East-North Interconnection transmission project.