PFC to raise Rs 10,000 crore through retail bond issues

NEW DELHI: State-run Power Finance Corporation (PFC) is looking to raise up to Rs 10,000 crore in this financial year through public issue of bonds in two tranches. The company’s first secured, redeemable non-convertible debentures (NCDs) public issue offers the option of tenures of three, five, 10 and 15 years.

The three-year tenure bonds offer a fixed coupon rate of 4.65-4.8 per cent per annum to 4.80 per cent per annum, while the five-year tenure will offer fixed coupon rates of 5.65-5.8 per cent depending on the category of investors. The 10-year tenure bonds offer fixed annual coupon rate of 6.63-7 per cent or floating coupon rate benchmarked to 10-year G-Sec plus a spread of 0.55-0.8 percentage points.

The 15-year tenure non-convertible debenture offers a range of fixed coupon rates with maximum coupon rate of 7.15 per cent per annum.

PFC chairman RS Dhillon said the proceeds of the issue will be utilised for lending purposes. According to the company’s prospectus, 75 per cent of the proceeds would go towards onward lending and financing and refinancing of existing debt.

PFC had previously sold tax-free infrastructure bonds to retail investors and this would be its maiden taxable issuance to individual buyers.

Dhillon said PFC has been focusing on diversifying its sources of funds. For the financial year 2020-2021, the company’s annual borrowing programme is Rs 1,18,000 crore, of which about Rs 67,000 crore has been mobilised till end of September 2020.

The first tranche of Rs 5,000 crore will open for subscription on Friday and close on January 29. The issue offers the option of applying through UPI mechanism to retail investors for an application amount of up to Rs 2 lakh.

The minimum application size is for 10 bonds aggregating to Rs 10,000 across all series of NCDs that are proposed to be listed on BSE Ltd and have been rated as stable by CARE Ratings, CRISIL and ICRA Ltd, indicating timely servicing of financial obligations and low credit risk.

Dhillon said presently, there are few attractive investment avenues available for retail investors. “Interest rates, under available options like fixed deposits or small savings schemes are quite low in the current market scenario. We thought it appropriate to launch a public issue to provide an alternative with better yield and varied tenure,” he said.

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