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Written by: Staff

HONG KONG, Feb 24 (Reuters) Spreads on a newly issued $300 million bond from India's National Thermal Power Corp. (NTPC) tightened on Friday as investors shut out from the initial offering chased the paper in the secondary market.

NTPC, India's largest power producer, sold the 10-year bond late on Thursday at a spread of 140 basis points above 10-year U.S.

Treasuries, the tight end of its revised indicative yield range of 140-145 basis points over.

Those bonds were quoted at 137/134 basis points over.

Market sources familiar with the deal said the offer had attracted $1.5 billion of orders.

It was the first dollar bond issue from India this year and was the Indian utilities firm's second global debt offer. It was also the first international bond issue from the country with a 10-year maturity since 1997.

The BB-plus-rated bonds, carrying a coupon of 5.875 per cent, were priced at 99.523 to yield 5.93 per cent, or 140 bps over 10-year Treasuries.

NTPC lowered the yield guidance from an initial 145-155 bps over after the offer generated strong demand.

Barclays Capital and Deutsche Bank were joint bookrunners.

Asian investors took 50.2 per cent of the transaction, while European buyers accounted for 41.6 per cent and the remainder went to U.S. offshore accounts, the sources said.

By investor type, banks took 41.6 per cent, funds 37.6 per cent, insurance 15.3 per cent and retail 5.5 per cent.

Proceeds from the sale would be used to fund NTPC's capital expansion plans. The debt offer is part of NTPC's newly set up $1 billion medium term note programme.

NTPC last tapped the offshore bond market in March 2004, when it sold $200 million in seven-year bonds.

Last year, Indian borrowers raised about $950 million worth of dollar bonds.


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