Thursday, December 29, 2011

PFC Tax Free Bonds

Following NHAI, Power Finance Corporation (PFC), a leading power sector lender has also come out with tax free bonds to raise up to Rs 1,000 crore. The company provides project term loans, equipment lease financing and short term loans for power projects, among others. The company has the approval to mop up Rs 5,000 crore through issue of tax-free bonds. It has raised Rs 967 crore already through private placement of these bonds in October and November.

The offer will open on 30th December, 2011 and will close on 16th January, 2012.

The 10 year and 15 year bonds carry coupon rates of 8.20 per cent and 8.30 per cent, respectively.

The proceeds of the issue will be used for funding power projects.

PFC also has the regulatory approval for USD 1 billion (about Rs 4,900 crore) Medium Term Note (MTN) programme that would tap international bond market. PFC expects to raise around Rs 30,000 crore in the current fiscal. More than half of the target amount is estimated to have already been raised.

This is a very similar issue to the NHAI and offers similar safety and return.


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