PFC lists $750 million bonds at NSE IFSC; increases foreign borrowing

Looking at resolving 4 more stressed power assets this fiscal

State-owned power financier Power Finance Corp (PFC) has, for the first time, listed its foreign currency bonds worth $750 million on NSE-IFSC GIFT City. The bonds will also be listed on India INX and Singapore Stock Exchange. This is the largest single tranche of international bond issue by PFC, the country’s largest non-banking financial company (NBFC) in the power sector.

PFC became the first Indian public sector firm to issue senior unsecured US Dollar bonds with a tenor of more than 10 years last week. The bonds had a coupon rate of 3.95 per cent and was oversubscribed with the final order book amounting to more than $2.2 billion, the company said on Monday.

This was PFC’s third international bond issue in the financial year 2019-20. 

With the bond issue, the share of foreign borrowing in PFC’s portfolio has gone up to 15 per cent at more than $6.5 billion.

“PFC has tried to diversify its borrowing portfolio over the past three years and has raised $5 billion so far from the overseas market. In the current financial year, we are eyeing $12 billion borrowing which is 25 per cent of the total borrowing,” said Rajeev Sharma, chairman and managing director, PFC. 

PFC executives said the proceeds from the bonds would be used in the newer sector that the NBFC is venturing into which includes renewable energy, electric vehicles and charging stations, Smart Cities and Grids and irrigation projects. 

Globally, financiers are moving away from fossil fuel dependent industries, and PFC said it doesn’t have any target but the shift will be natural. “Share of renewable energy in our portfolio has increased to 6 per cent from1 per cent earlier. We do not see any new thermal power projects coming up by any state. So our exposure effectively will reduce to fossil fuel,” Sharma said. 

The company, which has been battling stressed assets in the power sector, said it has been able to resolve two assets in the current financial year, and four more are likely to be resolved by the end of the fiscal.

Resolution of GMR Chhattisgarh power project was concluded with JSW Energy buying it, and RattanIndia Amravati power project was taken over by Goldman Sachs and Varde Partners. The four other projects are RKM Energy and Jhabua Power, for which state-owned NTPC has bid; Jal Power, for which state-owned NHPC has bid; and Ind Barath Utkal, which is likely to be bought by JSW Energy.