Public sector undertakings (PSU) are out on the bond street in a big way.
The Power Finance Corporation, a Government of India enterprise, is in the market to raise Rs 400 crore (inclusive of a Rs 200 crore greenshoe option) through a seven-year non-convertible debenture (NCD) issue at a coupon of 9.25 per cent.
Two other PSUs which have recently tapped the debt market are the the Delhi-headquartered Housing and Urban Development Corporation (Hudco) and the Bangalore-based ITI.
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Hudco has raised Rs 250 crore through an NCD issue. The bond had a notified amount of Rs 100 crore, but Hudco decided to retain the whole amount, according to investment banking sources. UTI Bank was the sole arranger to the issue.
The paper had three options with maturities of five, seven and 10 years. The coupons were pegged at 8.50 per cent (for five years), 8.75 per cent (seven years), and nine per cent (10 years). The tax-free instrument was rated 'AA+' by Crisil.
The Rs 94 crore ITI issue, which closed today, was oversubscribed. The company has decided to retain Rs 94 crore. At a coupon of nine per cent, SBI Capital Markets was the sole arranger of the issue.
A Rs 70 crore NCD issue of Nuclear Power Corporation also closed last week. According to data compiled by Prime Database, PSUs have raised 15 per cent more via the debt route at Rs 5,532 crore in the first nine months of the current fiscal against Rs 4,812 crore last year.
Analysts said that lower budgetary support has forced PSUs to access the debt market more this year.
Private companies have raised Rs 7,052 crore through the bond route between April and December 2001 against Rs 6,398 crore in the comparable period last year.
Private corporates have been tapping the debt market mainly to repay their high cost debts and substitute them with low cost loans since the beginning of the financial year.