Chunk of subscription coming from retail segment

Power Finance Corporation Ltd (PFC) is confident of mopping up more than the Rs 100 crore it targets from its tax-free bond issue, which closes on March 15.

Till the end of Thursday’s trading session, subscriptions were made for Rs 68 crore, more than 90 per cent of which came from the retail segment, said a PFC official.

Authorisation

In December, the public sector financer raised Rs 700 crore in the first tranche of tax-free bonds. In 2012-13, PFC has been authorised to issue tax-free bonds up to Rs 5,000 crore. Till now, the power sector financer has raised Rs 1,100 crore.

The funds raised through this issue will be used for lending, debt servicing and working capital requirements. The bonds are proposed to be listed on the Bombay Stock Exchange, also the designated stock exchange for the issue.

Tranche two, which is currently open, has an option to retain over-subscription up to the residual shelf limit of Rs 3,890.25 crore.

The bonds, valued at Rs 1,000 each, are secured, redeemable, non-convertible debentures, with benefits under Section 10(15)(iv)(h) of the Income-Tax Act, 1961. The minimum application can be made for five bonds (Rs 5,000) and in multiples of one bond thereafter.

The coupon rate is 7.38 per cent for retail investors and 7.54 per cent for a Hindu Undivided Family (HUF). Other categories have been given rates of 6.88 per cent and 7.04 per cent for 10-15 years.

The yields

This means investors in retail categories who are in the highest income-tax slab will get a pre-tax yield of 10.68 per cent for 10 years and 10.91 per cent for 15 years. Investors in other categories who are in the highest income-tax slab will get a pre-tax yield of 9.96 per cent for 10 years and 10.19 per cent for 15 years.

ICICI Securities Ltd, A.K.Capital Services Ltd, Enam Securities Private Ltd, Kotak Mahindra Capital Company Ltd and SBI Capital Markets are Lead Managers to the issue.

siddhartha.s@thehindu.co.in

(This article was published on March 8, 2013)
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