(Bloomberg) – Indian State Power Company NTPC Ltd. in February, it placed Eurobonds for $ 500 million, paying only a couple of cents in commission instead of more than $ 1 million.
NTPC top managers also sent Citigroup Inc. and to four other underwriters an invoice showing the costs of meetings with investors in London and Singapore, a source familiar with the deal said.
This case shows how desperate banks are fighting to deal in the Eurobond market of developing countries, whose turnover last year fell 29 percent to $ 344 billion. Banks’ commission has been declining for 10 years, and now the leading banks of the world’s largest financial centers are taking the competition to a new stage – they offer substantial discounts when organizing placements, and in some cases they do not take any fees at all, sacrificing profits for market share.
“There is a real battle over deals,” said Lutz Rehmeyer, director of Landesbank Berlin Investment GmbH, which manages approximately $ 12 billion of bonds, including NTPC bonds. – Bankers are willing to work for lower commissions as the number of transactions has decreased. The competition is growing. “
The underwriters who agreed to pay the travel expenses of NTPC’s top managers saved the company $ 40,000, said a source who asked for anonymity due to confidentiality of information. The syndicate of underwriters included Citigroup, Deutsche Bank AG, HSBC Holdings Plc, Barclays Plc and SBI Capital Markets.
Representatives of Citigroup, Barclays, HSBC and Deutsche Bank in Mumbai declined to comment. SBI representatives could not be promptly contacted. A spokesman for the NTPC declined to comment.