CESC Ltd has successfully raised Rs 190 crore through the private placement of 19,000 secured, unlisted, redeemable non-convertible debentures (NCDs). The debt issuance features a five-year tenure, with a maturity date set for September 24, 2031. The interest rate is linked to the one-month MIBOR OIS plus a spread of 2.20% per annum, paid monthly. This capital raise includes a call and put option exercisable at the three-year mark, providing strategic flexibility for both the company and the debenture holders.
CESC Ltd Secures Rs 190 Crore Debt Funding via Private NCD Placement
CESC Ltd has issued 19,000 secured, unlisted, redeemable, rated non-convertible debentures (NCDs) aggregating to Rs 190 crore.
Reader Takeaway: The company secures long-term capital at floating rates, though debt obligations increase with fixed quarterly redemption cycles.
What just happened
The Board of Directors committee approved the issuance of NCDs on September 22, 2026, with an allotment date of September 24, 2026. The NCDs are valued at Rs 1 lakh each, totaling Rs 190 crore. The instrument is structured with a five-year maturity period, expiring on September 24, 2031.
Why this matters
This private placement allows CESC Ltd to access liquidity using its fixed asset base as collateral. By opting for a floating coupon rate tied to the one-month MIBOR OIS plus 2.20%, the company aligns its borrowing costs with market interest rate benchmarks. The inclusion of a call/put option at the three-year mark enables the company to manage its balance sheet more effectively should interest rate environments change.
Security and Terms
Investors are protected by a first-ranking pari passu charge over the company’s movable and immovable fixed assets. The company is contractually obligated to maintain a 1.10x security cover. Should a payment default occur, the coupon rate will automatically increase by an additional 2% per annum as a penalty.
Repayment Schedule
Unlike bullet-repayment bonds, this issue follows an amortized structure. The principal will be repaid in 16 equal installments of Rs 11.875 crore. The first payment is scheduled for December 31, 2027, with subsequent payments occurring quarterly until the final maturity in September 2031.
Risks to watch
While the security cover provides protection, the floating interest rate exposes the company to market volatility in the MIBOR index. Furthermore, the mandatory quarterly redemption schedule commencing in 2027 will require consistent cash flow management from the power utility's core operations.