Power Grid Corporation (PGC) has raised R3,468 crore through a 15-year bond issue at a coupon rate of 8.53%, according to market sources. The company was earlier expected to cap the yield at 8.6%. The pay-in day for the issue is Monday, sources said.
The bond issue comes with a stripped tenure with payments starting from the end of the fourth year till the 15th year, according to market participants. PGC had earlier raised R2,928 crore in late May at a rate of 8.40% through bonds having the same tenure. This shows that yields have refused to cool down after having surged due to multiple factors such as RBI’s hawkish stance on further rate cuts and the Greek crisis.
In early June, the company’s subsidiary, Vizag Transmission, had managed to raise R290 crore at a coupon rate of 8.9% through its five-year bonds. On Thursday, NHPC is seeking bids from arrangers for its R1,475-crore long-term bond issue and the company has kept an upper cap on the coupon rate at 8.65%, market participants said.
Nuclear Power Corporation of India (NPCIL), Power Finance Corporation (PFC), National Bank for Agriculture and Rural Development (Nabard) and Rural Electrification Corporation (REC) are some other public sector units that are looking to tap the bond markets soon, according to sources.
The 10-year benchmark yield—a proxy for pricing corporate bonds—remained flat on Wednesday at 7.78% after two days of volatility. On Monday, the yield had fallen 5 bps to 7.75% on talks of a hike in FII investment limit in government securities. On Tuesday, the yields fell to 7.72% in intraday trade before closing 6 bps up at 7.78% on reports that RBI is likely to strip the market of excess liquidity.