NTPC had proposed to raise $100 million in the US market via the credit enhanced route. This route would have helped NTPC to bypass the limitations of lower sovereign credit rating and thus access funds at cheaper rates. NTPC turned to the US after Power Finance Corporation (PFC) had successfully sold its issue there.

However, the corporation, which was keen to push the issue through by the end of the year had to postpone it on the advice of ABN Amro. The banks engaged by the corporation for the issue included Citibank, Bank of America, Sumitomo and Chase Manhattan.

The bank had advised NTPC that in view of the Christmas and New Year holidays in the US it would not be possible to get finer rates necessary for an issue through the credit enhanced route.

According to industry sources, although the credit enhanced route helps thecorporate to bybass the low sovereign rating, the outgo to banks guaranteeing the issue rises. Hence, it was essential that the rates be fine enough to make economic sense in opting for the route.

As against the low credit rating enjoyed by India, which is the ceiling for anyone going to international market, the credit enhanced route would have helped NTPC to secure funds at rates available to AA (-) rated companies.

NTPC, reportedly took the cue from Thailand Electric Compnay, which had completed a similar deal about six months ago with the backing of the World Bank.

According to banking circle sources, NTPC's deal was significant in the sense that it would have opened a new channel for corporates seeking overseas funds and also paved way for bypassing the low country rating which restricts them from securing finer rates.