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.

State-owned Maharatna PSU Power Finance Corporation Ltd has secured board approval for a significant fundraising initiative through non-convertible debentures. The approval, granted on January 12, enables the company to proceed with its capital mobilization strategy.

Board Approval Details

The board has approved a public issue of secured, rated, listed and redeemable non-convertible debentures (NCDs) with a fundraising target of up to ₹5,000 crores. This NCD issuance represents a substantial capital raising exercise for the Maharatna PSU.

Shelf Fundraising Program

The approved NCD issue forms part of Power Finance Corporation's broader shelf fundraising program worth ₹10,000 crores. This strategic approach allows the company to access capital markets efficiently as per its funding requirements and market conditions.

The shelf fundraising mechanism provides Power Finance Corporation with flexibility in timing and structuring its capital market access, enabling the PSU to optimize its funding costs and meet operational requirements effectively.