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State-owned Power Grid Corp of India has decided to scrap its Rs.3,46,800 crore bond offering with a tenor of up to 15 years after having raised the money on Wednesday, according to three sources aware of the development.
According to sources, Power Grid took the decision to cancel the sale after peer NHPC raised funds a day later from a similarly structured deal at a coupon that was 3bp lower.
Power Grid’s offering pays a coupon of 8.53%, whereas NHPC is paying a 8.50% annual coupon. Both of the issuers are locally rated Triple A credits.
DCM bankers said they have not seen a precedent in recent times of an issuer cancelling an offering days after pricing it. The bonds were to be settled on Monday.
“It happens only in India and that too with state-owned issuers,” said a DCM banker on the deal. “We are trying to pacify the investors,” he added.
The company has communicated its decision to arrangers by phone, sources said. Bids for the Power Grid’s offering were called on Wednesday, a day on which Asian credit markets plunged, and drew 20 arrangers with submissions in the 8.49-8.60% range.
Of the 20 arrangers, 17 took part in the final sale with SBI Caps taking the biggest amount of Rs.1,12,200 billion rupees. The bonds of both companies will be repaid in 12 annual equal instalments from the fourth year after issuance.
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