Power Grid Corporation (PGC) is planning to tap the bond market to raise close to R2,000 crore, according to bond arrangers. Power Finance Corporation (PFC) is also looking to raise funds through bonds having tenure of two and three years. The company is likely to approach the bond markets next week, said bond arrangers.
PGC had called a meeting of bond arrangers on Tuesday and will meet them again to take a decision on pricing and tenure of the bond. According to a market participant, the company may come up with an issuance having a 4+12 stripped tenure, in which payment starts from the fourth year and extend till the 15th year.
Prior to this, the company had raised close to R1,300 crore through the bond market route in March this year at a coupon rate of 8.15% which was 5 basis points lower than what it paid in January.
Bond market experts are expecting the yield to be in the range of 8.30-8.45% for PGC if it comes out with a 10-year issue. The 10-year benchmark yield had hit a five-month high of 7.99% during the bond rout in early May following which rates for corporate bonds had shot up.
Short-tenure bond yields had risen as much as 48 bps, which was evident from the difference in the bid and ask rates of a recently proposed bond issue by a PSU, said bond arrangers. Market experts had also indicated that long-tenure bonds might have seen a 20-30 basis points rise in yields.
Power Grid’s subsidiaries — Vizag Transmission and NM Transmission company — were also looking to raise funds through the bond market but had postponed the issues.
Nuclear Power Corporation (NPCIL) is yet to finalise its borrowing plan for the fiscal along with how much of funds would be raised through the bond market and the loan route.