New Delhi, April 20: State-run power companies are likely to launch masala bonds worth $1 billion in the UK in the next four months to raise funds to meet their renewable energy targets.
The bonds, which will be in range of $150-250 million, are likely to be limited to a band of five to seven years.
Masala bonds are primarily rupee-denominated bonds issued to overseas buyers and settled in US dollars. Hence the currency risk lies with the investor and not the issuer, unlike external commercial borrowings (ECBs), where Indian companies raise money in foreign currency loans.
"Companies, including NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation and Rural Electrification Corporation, are likely to launch these masala bonds totalling $1 billion in the next three or four months in the UK to gauge investor appetite," power minister Piyush Goyal today said in London.
These will be subject to decisions made by the boards of the PSU energy companies, the minister said at a roundtable - Financing Renewables and Energy Efficiency - organised by the City of London here.
Goyal told investors that the Indian Renewable Energy Development Agency is coordinating a billion-dollar equity fund, perhaps the largest in renewable space.
This will be professionally managed by an independent international fund management company. Indian public sector firms have already committed $315 million, he said.
India is gearing up to meet its ambitious renewable energy targets of 175 GW of installed capacity by 2022.
In 2015, IFC issued the first masala bond listed on the London Stock Exchange. The bonds worth over Rs 1,000 crore were issued in a range of tenors, including a ten-year, to fund infrastructure projects.
Brushing aside worries over any spillover effect of SunEdison's debt woes on India's solar power plans, Goyal today set the record straight, saying some firms not doing well will not impact the programme's success.
"There are always certain cases of firms failing all over the world in every industry. There was a point of time where very large airline companies failed in different parts of the world. You have a failed steel sector in the UK. It doesn't mean that the whole sector collapses," he said.
