UP Power Corp raises Rs 3,951 crore through bonds

Uttar Pradesh Power Corporation has raised Rs 3,951 crore through bonds maturing in 10 years, at a coupon rate of 9.7%. According to sources, the bonds, which were listed on Wednesday, saw a strong response from a diversified class of investors, including banks, mutual funds, NBFCs, insurance companies and infra finance companies. “As many as 22 entities have invested in the bonds, including Credit Suisse, Barclays, Morgan Stanley, Nippon, Aseem Infra, Star Health, Tipsons, Trust group, AK Capital, etc,” an official told FE on condition of anonymity.

The government of Uttar Pradesh has provided unconditional and irrevocable guarantee for all payment obligations of these bonds, which offer a coupon rate of 9.7%.

According to sources, while the government had provided guarantee to raise Rs 8,000 crore to tide over its operational expenses, it allowed the Corporation to raise Rs 4,000 crore only. The proceeds are to be used for working capital requirements, the chief among them being clearing the dues of generation companies (gencos).

UPPCL’s accumulated losses till FY 21 are to the tune of Rs 70,454 crore, while its outstanding liabilities to gencos are around Rs 25,000 crore, out of which almost Rs 4,500 crore is due to the central generating and transmission companies, while another Rs 6,500 crore is due to independent power producers.