MUMBAI: North Eastern Electric Power Corporation Limited (NEEPCO), a Government of India-owned Miniratna company, has failed to get subscription for its Rs 300 crore debt issue in a market driven by fear of defaults and ratings downgrades. Market sources said NEEPCO’s Rs 300 crore seven-year bonds issue, carrying a yield of 9.25 per cent, received bids for only Rs 13 crore.
Poor subscription for a sovereign-backed company can be a reflection of the IL&FS fiasco. IL&FS debt defaults and NBFC stocks getting hammered indicate market vulnerability. The failure of current debt issue of NEEPCO can cast a gloom on the planned 10 per cent equity divestment.
Bidding for private placement of debt has moved to the electronic platform and lack of intermediaries to sell issues particularly in a volatile market could have been a problem, said an analyst. The company could not be reached for comments, and there was no official announcement from it either on under-subscription or withdrawal of issue.
NEEPCO is classified as a strategically important government company, meeting around 40 per cent of north-eastern region’s power demand through hydro and thermal power projects. The debt issue was rated AA by rating agencies ICRA and CRISIL with a stable outlook.
The company had raised Rs 300 crore in 10-year PSU bond issue with a coupon of 8.75 per cent in March this year, and before that, Rs 500 crore in an eight-year bond issuance with coupon of 7.68 per cent in November 2017.