Power Grid Corporation (PGC) has raised R2,928 crore through 15-year bonds at a coupon rate of 8.4%. The bonds come with stripped payments from the end of fourth year till the 15th year, bond arrangers familiar with the sale said.

“For a stripped-tenure bond, this is a good yield even as we see the investor appetite slowly coming back to the market,” said a bond arranger. Prior to this, the company had raised nearly R1,300 crore through bond market in March at a coupon rate of 8.15% which was 5 basis points lower than what it had paid in January.

PowerGrid’s subsidiaries — Vizag Transmission and NM Transmission company — were also looking at raising funds through the bond market, but had delayed the issues. Bond market experts are of the view that the companies are likely to approach the markets soon.

Another state-owned company Power Finance Corporation (PFC), which was planning to raise R3,000 crore has received bids in the range of 8.35-8.40% for short-tenure bonds but has extended its decision till Tuesday, according to bond market participants.

Sources indicate PFC was looking to issue bonds having four different tenures — two years with bullet payment; one year, eleven months and 26 days; three years with bullet payment and two years, eleven months and 26 days.

PFC had raised over R11,000 crore through the bond markets in March this year, said market sources, indicating that in April, the company had received bids in the range of 8.03-8.09% for its bond issues having tenures close to three years.

After the bond sell-off in early May, yields had surged by at least 48 basis points for short-tenure bonds. Despite seeing some softening over the last few days over expectations of a rate cut, the yields have not come back to the April levels.

“On the short-tenure side, the yields in the range of 8.35-8.39% can be considered as normal as we have seen some amount of softening in the last few days. The market is expecting a rate cut in this policy and after that we could see where the yields may settle down,” said Ashish Jalan, assistant vice-president, SPA Securities.

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