Power Finance Corporation plans retail bonds worth $1.4 billion

Power Finance Corporation plans retail bonds worth $1.4 billion

India’s biggest lender to the power sector plans to sell bonds to individual investors as it tries to attract savers dissatisfied with deposit rates at a 16-year low.

Power Finance Corp. has filed a draft prospectus for a 100-billion-rupee offering ($1.4 billion), and plans to raise the entire sum this quarter, according to Parminder Chopra, director (finance).

“We want to explore an alternative source of funds,” Chopra said in a telephone interview. “Fixed deposit rates are quite low, so there could be interest from the public to get a bit better rate.”

Unprecedented monetary stimulus to help cushion the economy from damage wrought by the Covid-19 crisis has dragged down rates that households get on bank savings, adding to challenges in a nation where inflation is persistently high. The rate on term deposits maturing in three years at India’s largest lender, State Bank of India, is 5.3 per cent, the lowest since September 2004.

Power Finance has previously sold notes to retail investors, but those were tax-free infrastructure bonds, Chopra said. This planned offering would be the company’s maiden taxable issuance to individual buyers, she said.

The New Delhi-based company has hired Trust Investment Advisors Pvt., A.K. Capital Services Ltd., Edelweiss Financial Services Ltd. and JM Financial Services Ltd. as lead managers for the offering. It plans to issue the AAA rated notes in one or more tranches, according to the draft prospectus.

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