PGC may soon hit bond markets for long-term issue

By: | Published: August 7, 2015 12:23 AM

After scrapping the long-term bond issue in July, Power Grid Corporation’s (PGC) issue is likely to hit the market soon.

After scrapping the long-term bond issue in July, Power Grid Corporation’s (PGC) issue is likely to hit the market soon. The state-owned company is likely to seek bids from arrangers for a similar tenure issue early next week, said sources.

Meanwhile, state-owned Steel Authority of India (SAIL) has cancelled its plans to raise funds through five-year bonds for which it had received bids at 8.40% on Wednesday, said sources. “SAIL was planning to raise funds in the range of 8.30-8.35%. But the lowest bid that the company received was at 8.40%. SAIL has now decided to come out with a three-year bond,” said a bond arranger.

Bond arrangers said PGCIL had not yet communicated its decision officially but  may to do so on Friday. PGCIL was earlier looking to raise Rs 3,468 crore at a coupon rate of 8.53% through 15-year bonds, said sources.

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The company had reportedly dropped the issue even as a day later, NHPC received bids which were 3 basis points lower at 8.50% for a similar tenure. Market sources said the company has raised Rs 1,500 crore through commercial paper with maturity in October at a rate of 7.46%.

Despite yields at a higher levels, companies still prefer corporate bond markets for their fund-raising needs due to a difference of 100-110 basis points between the bank lending rates and corporate bond yields. Bank credit growth is hovering in single digit with the lowest base rate at 9.70% whereas an AAA-rated public sector unit can raise funds through long-term bonds at rates close to 8.50-8.60%.

So far, corporates have raised Rs 1.69 lakh crore through the bond market in the first four months of this fiscal which is more than three times the amount tapped in the first four months of FY15, according to Sebi data.

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