Power Grid Corporation plans to raise Rs 1,500 crore via long-tenure bonds

By: | Published: July 8, 2015 12:21 AM

Power Grid Corporation (PGC) is planning to raise Rs 1,500 crore through long-term bonds keeping an option to retain over-subscription of the issue, according to market sources.

Power Grid Corporation (PGC) is planning to raise Rs 1,500 crore through long-term bonds keeping an option to retain over-subscription of the issue, according to market sources.

The bond issue will have a stripped tenure with payments ranging from the end of fourth year till the fifteenth year, a bond arranger said, adding the company is seeking an upper cap on the coupon rate at 8.60%.

pwc

The state-owned company had raised Rs 2,928 crore in late May through bonds at a coupon rate of 8.40%.

In early June, the company’s subsidiary Vizag Transmission had raised Rs 290 crore at a coupon rate of 8.90% through five-year bonds.

Yields had risen in June after RBI said it front-loaded the rate cut which indicated a long pause before another reduction in rates.

The Greek crisis had also prevented the yields from coming down.

However, the bond market saw an increased volatility over the last two days. With talks of hike in FII investment limit in government securities, the 10-year benchmark yields fell 5 bps on Monday to 7.75%.

On Tuesday, the yield hit an intra-day low of 7.72%, according to data by depositories.

Nuclear Power Corporation of India (NPCIL), NHPC, Power Finance Corporation (PFC), National Bank for Agriculture and Rural Development (Nabard) and Rural Electrification Corporation (REC) are some of the other public sector units that are looking to tap the bond markets soon, market sources have indicated.

Nabard had postponed its three-year bond issue last week as investors sought a yield of 8.30% against a target yield of 8.20%, said a source in the company.

Bond market experts believe the timing of future issuances would depend on how the yields pan out in the coming days.

“Wednesday’s bidding would be important because that will be a sign to issuers whether to approach the market right now or continue to wait till the yields come down,” a bond arranger said.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition