The power financier is likely to issue ₹600 crore worth of five-year non-convertible debentures with a greenshoe option of ₹3,000 crore on May 8. On the same day, the firm is also likely to issue three-year bonds worth ₹400 crore with an additional subscription option of ₹2,000 crore.
For the tranche of three-year bonds, PFC is opting for the floating rate – a relatively rare occurrence.
The bonds will be priced at a spread over yields on the government’s three-month Treasury Bills, with the coupon reset on a quarterly basis, sources said.
At the latest primary auction on Wednesday, the cutoff for the government’s 91-day Treasury Bills was set at 6.90%.
The five-year bonds will have a put-call option after 2 years, sources said.
“The decision to go for a floating rate bond (FRB) is an unusual one; now, the government has stopped issuing FRBs because of the volatility seen in Treasury Bills last year. The two-year put-call option for the five-year bonds may have been tailored to meet the needs of mutual funds,” a treasury executive said.The bonds are rated AAA by rating firms Crisil, CARE and ICRA. Bidding for the five-year bonds is likely to take place from 10:30 am to 11:00 am on May 8, while that for the three-year debt is scheduled from 11:00 am to 12:00 pm on the same day.
Fundraising for corporates through the debt capital market route has become cheaper following a sharp decline in government bond yields since early April. Government bond yields are the benchmarks utilised to determine the pricing of corporate debt.
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