State-owned Power Finance Corporation (PFC) will launch its maiden public bond sale to raise Rs 5,000 crore by issuing secured, redeemable non-convertible debentures (NCDs) to retail investors on January 15, 2021. The allotment will be done on first-come, first-served basis.
The base issue size is Rs 500 crore with an option to retain oversubscription of up to Rs 4,500 crore, aggregating up to 5,000 crores which is within the shelf limit of Rs 10,000 crore, the power sector lender said.
The NCDs are of face value of Rs 1,000 each. The Tranche I Issue is scheduled to close on January 29, 2021, with an option of early closure or extension as decided by PFC's board of directors or a duly constituted committee thereof.
The debentures offer options for tenures of 3, 5, 10 and 15 years. The 3-year tenure NCD in Series I will offer a fixed coupon rate of 4.65 per cent per annum to 4.80 per cent p.a., while the 5-year tenure NCD in Series II will offer fixed coupon rate of 5.65 per cent p.a. to 5.80 per cent p.a. depending on the category of investors.
The 10-year tenure NCDs offers options of both fixed and floating rates of interest. The fixed coupon rate is 6.63 per cent p.a. to 7.00 per cent p.a. The floating coupon rate, on the other hand, is based on Benchmark FIMMDA 10Yr G-Sec (annualised) + spread of 55 basis points to 80 basis points, subject to floor and cap rate depending on the category of investors. The 15-year tenure NCD offers a range of fixed coupon rates with maximum coupon rate of 7.15 per cent p.a.
The minimum application size is for 10 NCDs aggregating to Rs 10,000 collectively across all series of NCDs and in multiples of one NCD of face value of Rs 1,000 each thereafter.
The NCDs offered through the shelf prospectus and the Tranche I prospectus, both dated January 11, 2021, are proposed to be listed on Bombay Stock Exchange. The lead managers to the issue are Trust Investment Advisors Private Limited, A.K. Capital Services Limited, Edelweiss Financial Services Limited and JM Financial Limited.
The NCDs have been rated 'AAA' with stable outlook by CARE Ratings, ICRA and CRISIL. The bonds with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.
By Chitranjan Kumar