PFC’s Rs 5,000-cr bond issue opens Jan 15; CMD says it’s a better bet than FD

• Debentures of PFC offers coupon rates ranging upto 7.15% pa across maturities

• First public issue of NCD to offer option of applying through UPI Mechanism to retail individual investors for an application amount of up to Rs 200,000

Mumbai: Power Finance Corporation (PFC) is looking to raise Rs 10,000 crore via public issue of bonds in two tranches. "PFC is one of the leading financial institutions in India, focused on the power sector will open its Rs 5,000 crores public issue of secured, redeemable Non-Convertible Debentures on January 15, 2021. The base Issue size is Rs. 500 crores with an option to retain oversubscription of up to Rs. 4,500 crores aggregating up to 5,000 crores which is within the shelf limit of Rs 10,000 crores," said an official statement.

The NCDs are of face value of Rs 1,000 each. The tranche I issue is scheduled to close on January 29, with an option of early closure or extension as decided by PFC's Board of Directors or a duly constituted committee.

PFC CMD: NCDs will give investors higher returns than those offered by bank FD

Speaking to the media on Thursday, PFC Chairman and Managing Director RS Dhillon said that the NCDs will give investors higher returns than those offered by bank fixed deposits (FD). He added that the raising of Rs 10,000 crore within this fiscal itself will depend on the response received by the first tranche. 

The Tranche I Issue offers options for tenures of 3, 5, 10 and 15 years. The 3-year tenure NCD in Series I will offer a fixed coupon rate of 4.65 percent per annum (pa) to 4.80 percent pa, while the five-year tenure NCD in Series II will offer fixed coupon rate of 5.65 percent pa to 5.80 percent pa, depending on the category of investors. The 10-year tenure NCDs offers options of both fixed and floating rates of interest. The fixed coupon rate is 6.63 percent pa to 7.00 percent pa. The floating coupon rate, on the other hand, is based on Benchmark FIMMDA 10Yr G-Sec (Annualised) + spread of 55 basis points to 80 basis points, subject to floor and cap rate depending on the category of investors. The 15-year tenure NCD offers a range of fixed coupon rates with maximum coupon rate of 7.15 percent pa.

Minimum application size is for 10 NCDs aggregating to Rs 10,000 collectively

The minimum application size is for 10 NCDs aggregating to Rs 10,000 collectively across all series of NCDs and in multiples of One (1) NCD of face value of Rs 1000 each thereafter.

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The NCDs offered through the Shelf Prospectus and the Tranche I Prospectus both dated January 11, 2021 are proposed to be listed on BSE Limited. The Lead Managers to the Issue are Trust Investment Advisors Private Limited, A. K. Capital Services Limited, Edelweiss Financial Services Limited and JM Financial Limited, said the statement.

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