Power Sector Non-banking Financier PFC Raises $500 Mn Through Bonds

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Power sector Non-Banking Financial Company (NBFC), Power Finance Corporation (PFC), has raised USD 500 million on January 29, 2021, through the issuance of dollar-denominated Bonds with a fixed maturity of May 16, 2031. This is the longest tenor bond issuance from India since the start of 2021. 

The bonds have a fixed coupon of 3.35 percent per annum which was inside the fair value of PFC’s secondary bonds. The order book amounted to nearly USD 2.55 billion achieving an oversubscription of 5.1 times. The proceeds from bonds would be utilised in accordance with the external commercial borrowing regulations of the Reserve Bank of India (RBI), including for on-lending to power sector utilities.

Commenting on the bond issuance, Chairman and Managing Director of PFC, R.S. Dhillon, expressed satisfaction that despite the challenging COVID-19 situation being witnessed globally, PFC’s bond offer attracted wide participation from international investors. The deal concluded at very attractive terms which reflects the confidence of investors in PFC’s business as well as its credit profile and the growth story of the Indian power sector, said Dhillon.

Earlier in the month, we had reported that the NBFC’s first Rs 5000 crore taxable non-convertible debentures (NCDs) issue was subscribed close to nine times on January 18, 2021, and closed for subscription 11 days ahead of the schedule. The state-owned financial institution working as the financial backbone of the Indian power sector had planned to raise Rs 10, 000 crore through bonds in two tranches.

The first tranche of Rs 5,000 crore, including Rs 4,500 crore green-shoe option, opened for subscription on January 15, 2021, and was scheduled to close on January 29, 2021. But the issue had to be closed on January 18, 2021, the second day of trading, due to over-subscription on BSE.

The overwhelming response to the bond issue is expected to encourage the firm to come out with the second bond issue of Rs 5,000 crore during the current financial year, a source said.

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