Fitch Ratings on Friday said that it has assigned BBB-(EXP), an investment grade rating, to NTPC’s proposed senior unsecured notes.
The proposed notes are to be issued out of the company’s USD 6 billion medium-term note programme and are rated at the same level as the NTPC’s senior unsecured rating, as they will constitute its direct, unconditional, unsubordinated and unsecured obligations, a Fitch Ratings statement said.
According to the statement, the final rating is contingent upon the receipt of final documents conforming to information already received.
The NTPC’s Issuer Default Rating reflects its standalone credit profile of ‘BBB-’ Fitch will rate the company using a top-down approach based on a strong likelihood of state support if the company’s standalone profile weakens but stays within three notches of the Indian sovereign rating (BBB-/Stable) under the agency’s government-related entities (GRE) rating criteria, it added.
The NTPC’s ratings benefit from the company’s dominant market position in the country’s power-generation industry and regulated business model, which provides cash flow certainty.
The company has managed its counter-party risk well, with 100 per cent collection efficiency for the past 15 years despite the weak financial position of many of its customers. The NTPC’s high capex requirements are likely to lead to negative free cash flow over the next few years, the statement said.