India’s Power Finance Corp (PFC) is preparing to launch the country’s largest retail bond issue in nearly eight years, targeting a raise of up to ₹50 billion (approximately $554.23 million), as detailed in a term-sheet seen by Reuters. This significant bond issuance comes after a long hiatus, with PFC aiming to meet strong market demand.
The bond issue consists of a base size of ₹5 billion, with a greenshoe option of ₹45 billion, making it the largest public bond issuance since May 2018, according to data from the Securities and Exchange Board of India (SEBI).
Bond Details
PFC will offer bonds in different maturities, including:
- 5-year bonds
- 10-year bonds
- 10-year and 1-month bonds
- 15-year bonds
The bond issue will open for subscription on Friday, with the closure set for January 30.
Coupon Rates and Yields
- For institutional investors and corporates:
- 5-year bonds: 6.85% annual coupon
- 10-year bonds: 7.00% annual coupon
- 15-year bonds: 7.05% annual coupon
- For high-net-worth individuals (HNIs):
- 5-year bonds: 6.90% annual coupon
- 10-year bonds: 7.10% annual coupon
- 15-year bonds: 7.20% annual coupon
- For retail investors:
- 5-year bonds: 7.00% annual coupon
- 10-year bonds: 7.20% annual coupon
- 15-year bonds: 7.30% annual coupon
Zero-Coupon and Direct Payment Options
In addition to the standard bonds, PFC is offering a zero-coupon bond with a 10-year and 1-month maturity. The yields are:
- Institutional investors: 6.80%
- HNIs: 6.85%
- Retail investors: 6.95%
Furthermore, PFC is also providing an option to make a direct payment at maturity for the 15-year bond:
- Institutional investors: 7.05%
- HNIs: 7.20%
- Retail investors: 7.30%
First Public Bond Issue in 30 Months
This will be PFC’s first public bond issue in over 30 months. The bonds are rated AAA by CRISIL, CARE, and ICRA, ensuring a high level of trust in their safety and creditworthiness.
Lead Managers
The lead managers overseeing the bond issuance are AK Capital Services, Tip Sons Consultancy Services, Nuvama Wealth Management, and Trust Investment Advisors.
Conclusion
PFC’s move to raise funds through this public bond issue signals strong investor confidence and offers a valuable investment opportunity, especially for those seeking stable returns through government-backed bonds.
