Debentures offer coupon rates ranging upto 7.15% p.a.$ across maturities
Rs. 500 crores base Issue size; option to retain oversubscription up to Rs. 4,500 crores aggregating upto Rs. 5000 crores, which is within the shelf limit of Rs 10,000 crores
Allotment on first-come, first-served basis
Power Finance Corporation Limited, is one of the leading financial institutions in India, focused on the power sector will open its Rs 5,000 crores public issue of secured, redeemable Non-Convertible Debentures on January 15, 2021. The base Issue size is Rs. 500 crores with an option to retain oversubscription of up to Rs. 4,500 crores aggregating up to 5,000 crores which is within the shelf limit of Rs 10,000 crores. The Non-convertible debentures (NCDs) are of face value of Rs 1,000 each. The Tranche I Issue is scheduled to close on January 29, 2021 with an option of early closure or extension as decided by PFC’s Board of Directors or a duly constituted committee thereof.
The Tranche I Issue offers options for tenures of 3, 5, 10 and 15 years. The 3-year tenure NCD in Series I will offer a fixed coupon rate of 4.65% p.a to 4.80% p.a., while the 5 year tenure NCD in Series II will offer fixed coupon rate of 5.65% p.a. to 5.80% p.a. depending on the category of investors. The 10-year tenure NCDs offers options of both fixed and floating rates of interest. The fixed coupon rate is 6.63%p.a. to 7.00% p.a. The floating coupon rate, on the other hand, is based on Benchmark FIMMDA 10Yr G-Sec (Annualised) + spread of 55 basis points to 80 basis points, subject to floor and cap rate depending on the category of investors. The 15-year tenure NCD offers a range of fixed coupon rates with maximum coupon rate of 7.15% p.a.
The minimum application size is for 10 NCDs aggregating to Rs. 10,000 collectively across all series of NCDs and in multiples of One (1) NCD of face value of Rs. 1000 each thereafter.
The NCDs offered through the Shelf Prospectus and the Tranche I Prospectus both dated January 11, 2021 are proposed to be listed on BSE Limited. The Lead Managers to the Issue are Trust Investment Advisors Private Limited, A. K. Capital Services Limited, Edelweiss Financial Services Limited and JM Financial Limited.
Ratings by CARE, CRISIL & ICRA indicate ‘High degree of safety’
The NCDs proposed to be issued under the Issue have been rated ‘CARE AAA; Stable’ by CARE Ratings Ltd, ‘CRISIL AAA / Stable’ by CRISIL Ltd (“CRISIL”); and ‘[ICRA]AAA(Stable)’ by ICRA Ltd. NCDs with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations and such instruments carry lowest credit risk.
Key Terms of the Issue Structure:
| Issue Structure | |||||||
| Series | I | II | III | IV* | V | VI | VII |
| Interest Type | Fixed | Fixed | Fixed | Fixed | Floating# | Fixed | Fixed |
| Frequency of Interest Payment | Annual | Annual | Quarterly | Annual | Annual | Quarterly | Annual |
| Tenor | 3 Years | 5 Years | 10 Years | 10 Years | 10 Years | 15 Years | 15 Years |
| Coupon (Per cent.) for category I & II | 4.65% | 5.65% | 6.63% | 6.80% | Benchmark FIMMDA 10Yr G-Sec (Annualised)+ 55 BPS | 6.78% | 6.95% |
| Coupon (Per cent.) for category III & IV | 4.80% | 5.80% | 6.82% | 7.00% | Benchmark FIMMDA 10Yr G-Sec (Annualised) + 80 BPS | 6.97% | 7.15% |
| Effective Yield (per cent. Per annum) for category I & II | 4.65% | 5.65% | 6.79% | 6.80% | – | 6.95% | 6.95% |
| Effective Yield (per cent. Per annum) for category III & IV | 4.80% | 5.80% | 6.99% | 7.00% | – | 7.15% | 7.15% |
| Put and Call Option | Not Applicable | ||||||
| Redemption Amount (Rs. Per NCD | Rs. 1000.00 | Rs. 1000.00 | Rs. 1000.00 | Rs. 1000.00 | Rs. 1000.00 | Rs. 1000.00 | Rs. 1000.00 |
| Redemption Date (from the Deemed Date of Allotment) | 3 Years | 5 Years | 10 Years | 10 Years | 10 Years | 15 Years | 15 Years |
| Minimum Application | Rs. 10,000 (10 NCDs) across all Series collectively | ||||||
| In multiples thereafter | Rs. 1,000 (1 NCD) | ||||||
| Face Value / Issue Price (Rs./ NCD) | Rs. 1,000 (1 NCD) | ||||||
| Mode of Interest Payments | Through various payments available. | ||||||
| Default Series | Series IV | ||||||
# G-sec 10 Yr (annualized) is referred to as FIMMDA 10Yr G-sec benchmark published by FIMMDA Reference computed on an annualized basis as computed by FIMMDA.
# The effective coupon will be subject to a floor rate of 5.80% p.a. and cap rate of 7.30% p.a. for Category I & II Investors and floor rate of 6.00% p.a. and cap rate of 7.50% p.a. for Category III &IV Investors.
* The Company shall allocate and allot Series IV NCDs wherein the Applicants have not indicated their choice of the relevant NCD Series.
