PFC raises $1 billion through international bonds

State-run Power Finance Corp. Ltd (PFC) has raised $1 billion by issuing bonds in the international market, the company said in a statement on Wednesday.

“This was the PFC's first issuance in the international market after successful acquisition of Government of India holding in REC,” the statement from the largest financier for the domestic power sector in India added.

PFC recently completed the purchase of a controlling stake in state-run peer REC Ltd that will create an $80 billion lending giant by assets. PFC paid ₹14,500 crore to the Union government to buy a 52.63% stake in REC.

“The USD 1 billion Reg- S transaction was executed through two tranches. The 5 year tranche for USD 400 million @3.87% at a reoffer spread of 195 bps over 5-year UST and 10-year tranche for USD 600 million @4.577% at a reoffer spread of 242.5 bps over 10-year UST,” the statement added.

This comes in the backdrop of PFC increasing its borrowings from the international market in 2019-20 to tide over a liquidity crunch in the country. Out of PFC’s fund-raising target of ₹80,000 crore for the current fiscal year, it will raise 10% in foreign current borrowings and increase its target to 15-20% over the next two years.

At the end of FY19, PFC had a loan book of ₹3.15 trillion, growing at 13% year-on-year. It has a capital adequacy ratio of over 17% and net interest margin of 3.37%. Its stressed asset portfolio of roughly ₹29,000 crore has been provisioned up to 51% and further provisioning might not be necessary.

PFC chairman and managing director Rajeev Sharma said in the statement that the transaction establishes PFC status as leading NBFI in India having priced its first dual and largest USD bonds transaction for government-owned Indian NBFC.

For the March quarter, PFC reported standalone net profit of ₹2,117.56 crore, up 165% from ₹796.35 crore in the year-ago period. Its earnings have stabilized after a host of bad loan provisioning through FY18. Revenue for the quarter stood at ₹7,636.40 crore, against ₹6,085.78 crore, up 25%. For the full year, net profit was ₹6,952.92 crore, an increase of 58%.