National Thermal Power Corp (NTPC) continues to delay the announcement of the official mandate for its $100 million five year fundraising requirement. Credit Lyonnais, HSBC and State Bank of India were heard to have been verbally mandated last week although rumours suggest that this may have changed again.
The borrowers last deal was a $120 million two and a half year deal completed in 2001 by arrangers SBI International, UFJ, Bank of India and Mizuho. This financing paid an all-in of 62bp for top tier commitments of $10 million or more and attracted seven tickets in general.
ABN Amro Bank is currently syndicating a $100 million deal for private Indian utility concern, BSES, that pays an all-in of 103bp for five year money. Market sources suggest that NTPC will be priced inside this transaction as it is wholly owned by the government and enjoys the same credit rating as the sovereign.
Bankers across the region have been lamenting the lack of activity in the Asian loan market and the limited opportunities available. Many borrowers have opted to stay home for their financings and raise loans in their respective domestic currencies. Indian credits have benefited from this trend as it is cost effective to borrow in US dollars and then swap the funds into rupee as this is still cheaper than the domestic lending rates. This has led to a large number of Indian deals hitting the market in the first five months of the year with Dealogic figures showing that seven deals were completed in the first four months compared with 15 for the whole of 2002.
In addition to this transaction National Hydroelectric Power Corp has sent out requests for proposals for a US dollar deal and GE Capital Services India is tapping the market for a $50 million fundraising through Barclays.
Other facilities that are in syndication include the $50 million loan for LIC Housing, a $50m loan for ICICI Home Finance and a $120 million credit for Hindustan Zinc Co.
Despite the eagerness of foreign banks to add these assets to their books there have been some deals that have struggled to make an impact. A $100 million five year fundraising for Export-Import Bank of India was pulled in April after failing to attract any commitments after almost two months in syndication. This financing paid an all-in of 85bp for five years to underwriters committing $33 million apiece. One loan official suggested that the thin margin discouraged investors from joining the deal.
Bidding for the NTPC facility was reported to have been very competitive with three or four bank groups involved. Some of the losing bidders suggested that the final price was tight and wished the winners good luck with the deal in the market. Market observers suggest that the pricing of the transaction will determine the success of the syndication and that investors may be wary if it is too tight. This will be vital given the rebound in Korean pricing with Woori Bank's latest offering paying 72bp all-in for three years. A mandate is expected imminently and the deal will be launched soon afterwards.
