Tata Power Ltd on Friday said it has successfully raised Rs 2,000 crore through the issuance of non-convertible debentures (NCDs) via a private placement. This is part of its strategy to foray into the debt markets.
According to an exchange filing, the NCDs have been allotted to selected investors through the private placement process after obtaining approval from the committee of directors. It is a total of two series of 1 lakh debentures, each with a face value of Rs 1,00,000, amounting to Rs 2,000 crores.
For the three-year Series I and the five-year Series II, use the multiple yield allotment approach. They are advocated by the Bombay Stock Exchange and the Securities and Exchange Board of India, with coupon rates found at 7.05% and 7.25%, respectively.
NCD characteristics: They are unsecured, senior, redeemable, rated, taxable, non-cumulative, and proposed for listing in the Wholesale Debt Market Segment of BSE Ltd. Market observers attributed this success to the impressive institutional appetite for highly rated corporate bonds despite interest rate volatility.
For Tata Power Company, accessing the bond market offers an affordable alternative to borrowing from banking institutions. This shows that the financial market portrays confidence in their creditworthiness.
A spokesperson for Tata Power also highlighted that the raised funds would enable the company to manage its debt profile more effectively, thereby refinancing the existing debt at a lower interest rate.
Although the company has not clarified the exact use of the funds, market analysts have stated that such fund raises are always a balance between short-term borrowings and specific expenditure needs.
Tata Power, a Tata Group enterprise and one of the largest integrated power players in India, has been increasing its focus on cleaner energy and sustainability over the past few years.
Market participants welcomed the development, viewing it as a sign of prudent financial management in the corporate sector. A fixed-income strategist at a domestic brokerage said a sub-7.3% yield on a five-year bond from an established issuer remains highly competitive in the current yield environment.
However, the strategist cautioned that broader macroeconomic factors will continue to influence corporate borrowing costs in 2026.
Tata Power's action comes in the wake of recent fundraising in the corporate debt market by other large corporates in India, an indication that there is interest in NCD issuances as a tool for managing liquidity and growth.