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Rating Action:

Moody's assigns Baa2 to NTPC's MTN drawdown

12 Mar 2018

Singapore, March 12, 2018 -- Moody's Investors Service has assigned a Baa2 rating to the proposed senior unsecured USD notes to be issued by NTPC Limited (NTPC, Baa2 stable).

The rating outlook is stable.

The notes will be issued under NTPC's existing USD6 billion medium-term note program (MTN) which is rated (P)Baa2.

The company plans to use the proceeds to finance capital expenditure of ongoing and/or new projects, coal mining projects and renovation and modernization of power stations.

RATINGS RATIONALE

"The Baa2 rating reflects NTPC's strategic importance as the largest power generation company of India as well as its close operational and financial links with the Government," says Abhishek Tyagi, a Moody's Vice President and Senior Analyst.

The Baa2 ratings for the notes and the MTN program incorporate a one-notch rating uplift from NTPC's baseline credit assessment (BCA) of baa3, reflecting Moody's expectation that Government of India (Baa2 stable) will provide support to NTPC in times of stress.

NTPC's installed capacity represents 15.8% of India's installed power generation capacity. In terms of overall power generation, NTPC contributed 23.8% in the fiscal year ended March 2017 (FY2017).

NTPC's BCA is supported by a favorable regulatory framework, its solid financial profile for its rating level, payment security mechanism and strong liquidity position. Furthermore, the strong and sustainable growth evident in India's electricity demand supports the company's operating profile and its dominant position as a low-cost producer in the country's power industry.

The stable outlook on the rating reflects our expectation that NTPC will continue to generate relatively predictable cash flows for its regulated power business owing to its competitive position, and will maintain its sound liquidity profile.

An upgrade of India's sovereign rating will likely trigger an upgrade of NTPC's ratings.

Downward pressure on the BCA could emerge if there are unfavorable regulatory developments, such as tariff reductions, and which could negatively affect the company's financial position. A sovereign downgrade could also impact the rating negatively.

NTPC has a strong financial profile, although leverage has been increasing as a result of incremental capex to support capacity expansion. The BCA could be pressured if there is continued weakening in financial metrics, including FFO/Debt declining below 7.5% on a consistent basis. Having said that, NTPC's rating is resilient to a deterioration in the BCA.

Furthermore, a rating downgrade could result if the government reduces its interest in NTPC to below 50%, or evidence emerges of a weakening in government support.

The methodologies used in this rating were Regulated Electric and Gas Utilities published in June 2017, and Government-Related Issuers published in August 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

NTPC Limited is engaged in the construction and operation of power plants. It is the largest power generating company in India (Baa2 stable), with an installed generation capacity of 51,383 megawatts (MW) as of December 2017. It has a nationwide presence through its coal-based (38,755 MW), gas-based (4,017 MW), hydro (800MW), renewables -- solar PV (870 MW), wind (50 MW) and joint-venture/subsidiary projects (6,891 MW). It generated revenue of INR812 billion ($12.5 billion) in the fiscal year ended 31 March 2017 (FYE03/2017). At end-December 2017, the Indian government owned around 62.27% of NTPC.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Abhishek Tyagi
Vice President - Senior Analyst
Project & Infrastructure Finance
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Terry Fanous
MD-Public Proj & Infstr Fin
Project & Infrastructure Finance
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

No Related Data.
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