Tata Power said that credit rating agency CRISIL has assigned AA rating with stable outlook to the company's proposed issue of Rs 1500 crore unsecured, listed, subordinated, debentures.
Tata Power has decided to issue unsecured, subordinated, listed, rated securities in the form of non-convertible debentures (NCDs) of Rs 1500 crore. These debentures have a maturity of 60 years and there is a call option with the company which can be exercised at the end of 10 years from deemed date of allotment and at the end of every year thereafter. The coupon (which may be deferred at the company's option) on the debentures is set at 10.75% per annum payable semi-annually, with a step up provision if the debentures are not called after 10 years. These debentures rank senior only to the share capital of the company
CRISIL has reaffirmed its ratings on Tata Power's existing debt instruments and bank facilities at AA/Stable/CRISIL A1+, Tata Power said in a statement. CRISIL's ratings on the bank facilities and debt instruments of Tata Power continue to reflect the company's strong position in the electricity generation, transmission, and distribution business, its stable licensee business that has regulated returns, and the significant progress made by the company in its two key ongoing projects Maithon Power Project and Mundra UMPP project where the second unit has declared commercial operations
According to CRISIL, Tata Power has demonstrated strong financial flexibility through timely financial closure for its two ongoing projects, with long-term loans, and raising funds through global depository receipts (GDRs), foreign currency convertible bonds (FCCBs), perpetual debentures, US dollar hybrid bonds and sale of investments. CRISIL believes that Tata Power enjoys financial flexibility by virtue of the need-based support that it will receive from the other Tata group companies, and its substantial investments in these companies, which can be liquidated to meet its fund requirements
CRISIL also believes that the strong performance of Tata Power's Mumbai operations and the coal companies will help offset the unfavorable project economics for the Mundra UMPP. The rating outlook may be revised to 'Positive' if the tariff renegotiations for CGPL are successful and if Tata Power does not undertake any large, incremental, debt-funded capex programme without commensurate infusion of equity capital.
Meanwhile, another credit rating agency CARE has assigned 'CARE AA' rating to the proposed issue of Rs 1500 crore unsecured, listed, subordinated, debentures by Tata Power. CARE has also reaffirmed its 'CARE AA' rating assigned to perpetual debentures of the company.
Tata Power is India's largest integrated power company with a significant international presence. The company has an installed generation capacity of 6,099 megawatts (MW) in India and a presence in all the segments of the power sector viz generation (thermal, hydro, solar and wind), transmission, distribution and trading. It has successful public-private partnerships in generation, transmission, and distribution in India. Tata Power's consolidated net profit fell 66.1% to Rs 145.93 crore on 24% growth in net sales to Rs 7197.57 crore in first quarter ended June 2012 over year ago period