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Source: media reports

Power Finance raises around Rs2,600 cr via bonds

Power Finance raises around Rs2,600 cr via bonds
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First Published: Thu, Jul 30 2009. 10 46 AM IST
Updated: Thu, Jul 30 2009. 10 46 AM IST
Mumbai: Power Finance Corp has raised around Rs2,600 crore via a bond sale, with pay-in scheduled for Thursday, three sources with knowledge of the deal said.
Two sources said the second investment option was the most popular, and investors bought the bonds and sold the paper in the forward market.
The issue has three options comprising four-year and 15-year bonds.
The four-year bonds carry a coupon rate of 7.15%, strippable at the second, third and fourth year.
The second option is a 15-year bond yielding 8.60%, strippable at the fifth, tenth and fifteenth year. One source said the investors retained the five-year bond and sold the 15-year in the secondary market at yields of around 8.73/75.
Five-year bonds of state-run companies are currently trading at around 8% in the secondary market, which results in the 8.60% offered by the PFC bond being a clear premium and which more than offsets the loss the investors would have to bear on the longer-term paper, the source added.
The third option is a 15-year bond with a coupon rate of 8.65% and a call option every three years.
Sources said this would mostly be taken up by provident funds and held till maturity as the company is unlikely to call the bond before maturity as interest rates are expected to rise.
The issue aimed to raise at least Rs150 crore and had a greenshoe option to retain extra bids worth an unspecified amount.
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First Published: Thu, Jul 30 2009. 10 46 AM IST