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Sources say that India's two state run firms will issue debt of over $500 million in August.

Three sources familiar with the matter confirmed on Tuesday that the state-owned companies NHPC (India) and NTPC Green Energy (Canada) will sell short-term bonds to raise approximately 45 billion rupees ($512,6 million).

Sources said that NHPC, the hydropower company in India, is planning to raise 20 billion rupees by selling bonds for two or three years. It should be the initial of the two companies who come up with this issue.

Sources claim that NTPC Green Energy will debut on the bond market, raising between 20 and 25 billion rupees via five-year bonds.

One source said that "NTPC Green Energy would prefer to use shorter-term notes, but could also choose 10-year notes if investors show enough interest."

Sources requested anonymity because the discussions are private.

The companies didn't respond to an email asking for comment.

Early May, NHPC raised approximately 19.45 billion rupees through bonds that were redeemable and separately transferable with maturities ranging from six to 15 years.

The second source stated that "short-end rates have dropped and there's a good spread between the three-to five-year and the 10-year paper. This encourages both firms to issue such papers."

The Reserve Bank of India is expected to make a monetary policy announcement later that day. This will boost the demand for bonds.

(source: Reuters)