Power Finance Corporation has announced plans to raise ₹5,000.00 crore through a non-convertible debenture (NCD) issue, representing the country's largest retail bond offering in nearly eight years. The Maharatna PSU filed its tranche I prospectus dated January 9, 2026, for the public issue of secured, rated, listed, redeemable NCDs with a face value of ₹1,000.00 each.

Issue Structure and Timeline

The NCD issue features a base size of ₹500.00 crore with a greenshoe option of up to ₹4,500.00 crore, operating within the company's shelf limit of ₹10,000.00 crore. The tranche I issue will open on Friday, January 16, 2026, and close on Friday, January 30, 2026, with provisions for early closure or extension in compliance with SEBI regulations.

Investment Options and Coupon Rates

PFC will offer bonds across multiple maturity periods with differentiated coupon rates based on investor categories. The company has structured five distinct investment options to cater to various investor preferences.

Retail investors receive the highest coupon rates, with the 15-year tenor offering an annual coupon of 7.30%. The zero-coupon option provides a 10-year and 1-month maturity with competitive yields, while the direct payment option allows investors to receive returns at maturity for the 15-year paper.

Credit Ratings and Listing Details

The NCDs have received top-tier AAA ratings from three leading rating agencies, reflecting the strong credit profile of the Maharatna PSU. The debentures will be listed on the National Stock Exchange of India Limited, which serves as the designated stock exchange for the issue.

Credit Ratings:

• CARE Ratings Limited: "CARE AAA; Stable"
• Crisil Ratings Limited: "Crisil AAA/Stable"
• ICRA Limited: "[ICRA] AAA (Stable)"

Fund Utilization and Management

PFC has outlined a clear framework for deploying the raised capital, with the majority allocated toward core lending activities. At least 75% of the net proceeds from tranche I will be utilized for onward lending, financing or refinancing existing indebtedness, and debt servicing. The remaining 25% will support general corporate purposes.

The funds raised specifically from zero coupon NCDs will be exclusively used for onward lending activities. AK Capital Services, Tip Sons Consultancy Services, Nuvama Wealth Management, and Trust Investment Advisors serve as lead managers for the issue.

Stock Performance Context

PFC shares have shown mixed performance across different timeframes. The stock gained 8% over one month but declined 14% in the past six months. While the stock dropped 7% over two years, it delivered multibagger returns of 282% over the past five years. On Monday, PFC shares closed 3.47% higher at ₹371.50 on the BSE, reflecting positive market sentiment ahead of the NCD announcement.

Power Finance Corporation has announced plans to raise ₹5,000.00 crore through a public issue of bonds, marking a strategic shift after facing challenges in the private placement market. The company aims to offer attractive coupon rates while addressing its funding requirements through the public route.

Bond Issue Structure and Timeline

The bond issue features a structured approach with specific timeline and sizing parameters:

The bonds have been structured with a base size of ₹500.00 crore and a substantial greenshoe option of ₹4,500.00 crore. The aggregate amount of ₹5,000.00 crore falls within the company's shelf limit of ₹10,000.00 crore, providing adequate regulatory compliance.

Interest Rates and Credit Ratings

Power Finance Corporation is offering competitive coupon rates between 6.85% and 7.30% across different series of bonds. The bonds have received strong credit ratings, earning 'AAA' ratings with 'Stable' outlook from three major rating agencies:

• CARE Ratings
• CRISIL
• ICRA

The bonds are proposed to be listed on the National Stock Exchange of India (NSE), providing liquidity options for investors.

Fund Utilization Strategy

The company has outlined a clear allocation strategy for the bond proceeds:

This allocation reflects PFC's core business focus on lending activities while maintaining flexibility for corporate operations and growth initiatives.

Market Context and Previous Challenges

This public bond issue comes after Power Finance Corporation faced significant challenges in the private placement market. The company withdrew three bond issues due to investor demands for higher coupon rates amid rising government bond yields:

• December 23: Third consecutive withdrawal following higher yield demands
• December 9: Scrapped ₹3,500.00 crore issue (15-year maturity) due to higher coupon rate demands
• November 26: Withdrew ₹3,000.00 crore issue (3-year-4-month-17-day maturity) as investors expected RBI rate cuts

The shift to public issuance represents PFC's strategic response to challenging market conditions in the private placement segment, where investors have been demanding higher yields following the surge in government securities yields.