InvestorQ : Why is Power Finance Corporation planning to raise Rs.10,000 crore via bonds?
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Why is Power Finance Corporation planning to raise Rs.10,000 crore via bonds?

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1 month ago
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Power Finance Corporation or PFC is planning to raise Rs.10,000 crore through the issue of bonds in two tranches of Rs.5,000 crore each. The first tranche of Rs.5,000 crore will open for subscription on January 15 and will remain open till January 29. This issue is unique in that it is the first issue of taxable bonds to individual buyers.

PFC had earlier issued tax-free infrastructure bonds, which normally gets a good response from people looking to save tax. This could be a tougher test in marketing. PFC plans to use the proceeds of the issue for lending, financing, refinancing existing loans, debt repayment, pre-payment and for general corporate purposes. Three-fourth will be to financing only.

The bond issue are secured redeemable NCDs. Each NCD will have a face value Rs 1,000 and investors can subscribe to the bonds in lots of 10 NCDs. The issue permits four categories of investors in the issue viz. institutional investors, non-institutional investors, high net-worth individuals or HNIs and retail individual investors. FPIs, foreigners and minors can’t apply.

These bonds of PFC will be made available in four tenors of 3 years, 5 years, 10 years and 15 years respectively. The bonds will carry coupon rates of 4.65%, 5.65%, and 6.78-6.95% for bonds having 3 years, 5 years and 15 years tenure respectively. The 10-year bond for these investors will pay 6.53 to 6.80%. The actual yields will depend on listed price.

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