Fitch assigns NTPC's $500 mn notes final 'BBB-' rating

Fitch Ratings has assigned state-owned NTPC's $500 million senior unsecured notes due 2026, which were issued out of its $4 billion medium-term note programme, a final rating of 'BBB-'.

"Fitch Ratings has assigned NTPC (BBB-/stable) 4.25% $500 million senior unsecured notes due 2026 a final rating of 'BBB-'. The notes are issued out of its $4 billion medium-term note programme," Fitch Ratings said in a release.

The notes constitute direct, unconditional, unsubordinated and unsecured obligations of NTPC.

The assignment of the final rating follows a review of the final documentation materially conforming to the draft paper previously received. The final rating is the same as expected one assigned on February 21.

The key rating drivers include dominant market position of NTPC as it is the largest power generation company in India, accounting for a fourth of total power generated in the country.

Of India's total installed power generation capacity of 288 gigawatts (gw), more than two-thirds are thermal. NTPC accounts for nearly 22% in the thermal pie.

Its rating has also been supported by its robust business model in the form of stable operational cash flows due to a favourable regulatory framework.

The company has long-term power purchase agreements (PPAs) for all its plants that allow for pass-through of fixed as well as fuel costs.

Fitch said the offtake risks are limited.

It further said NTPC has managed its counter-party risks well despite most of its customers being state utilities with weak financial profile.

The payables are backed by letters of credit equivalent to 105% of average monthly payments and the tri-partite agreement between NTPC, the Reserve Bank of India and state governments, which runs until October 2016.

The company has signed supplementary agreements with all state utilities.