Mumbai: Power Finance Corp. plans to sell at least Rs1.5 billion of bonds, a company official and another individual familiar with the development said on Wednesday.
The company plans to sell three-year bonds carrying a coupon rate of 7.2%, they added.
Power Finance also plans to enter into an integrated swap to hedge interest rate risk on the bonds. Companies use an integrated swap to take the rates lower as the swap makes the liability floating for the borrower.
They invite separate bids for swaps, and complete a transaction where the counterparty pays the company the rate on the bond, and the company would pay the benchmark rate plus the spread.
“We have decided on an integrated swap. We have invited bids for spread over one-year and only after the bids have been evaluated will we open the bond sale,” the company source said.
Market sources say the issue is likely to open and close on Monday.
The company plans to raise Rs230 billion via bonds and structured deals in fiscal 2009-10.