Power Finance Corporation raises $750 million through overseas bonds

Power Finance Corporation (PFC) concluded the issuance of bonds worth $750 million of tenor 10.25 years on Friday. 

The bonds have a fixed coupon of 3.95 per cent per annum and an yield of 4.066 per cent. 

With this bonds issue, PFC becomes the first Indian public sector firm to issue senior unsecured dollar bonds with a tenor of more than 10 years, said the company in a public statement. 

This is PFC’s third international bond issuance in FY20 as well as the largest bond in a single tranche. The final order book amounted to more than $2.2 billion, said the company. “The bond issuance attracted active and wider participation from investors across the US, European and Asian markets, with around 42 per cent participation from the US market,” said PFC in its statement.

 The proceeds from the bonds issue will be utilised in accordance with the external commercial borrowing or ECB regulations of the Reserve Bank of India, including for lending to power sector utilities, it said. 

Of the total borrowing programme of PFC ($12 billion) for 2019-20, the total foreign currency raising now stands at around $3 billion and the balance is domestic raising.  

“I am happy that PFC’s bond offer saw a strong demand in the international market and global investors have chosen to contribute to the development of the Indian power sector. The deal concluded at very attractive terms, which shows the high confidence of investors in PFC’s business as well as its credit profile and the growth story of the power sector,” said PFC chairman and managing director Rajeev Sharma.