Power Finance Corp tax free bonds issue to open on Feb 18

State-owned Power Finance Corporation (PFC) is going to launch its second tranche of bonds issue of Rs 100 crore on Monday, February 18, 2013, with an option to retain an oversubscription upto the residual shelf limit of Rs 3,890.25 crore.

It is tax free bonds issue of face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures, having benefits under section 10(15)(iv)(h) of the income tax act, 1961.

According to prospectus filed with the SEBI, the Central Board of Direct Taxes (CBDT) authorised the company to raise bonds aggregating to Rs 5,000 crore in fiscal 2013, out of which company raised an amount of Rs 410 crore on a private placement basis. In December, PFC already raised Rs 699.75 crore through Tranche 1 of bonds issue.

The issue will close for subscription on Friday, March 15, 2012. Minimum application can be made for a minimum of five bonds (Rs 5000) and in multiples of one bond thereafter.

In case of series 1, the coupon rate is 7.38 percent for retail investors & HUFs (which are applying for an amount aggregating upto and including Rs 10 lakh across all series of bonds in the issue) and 6.88 percent for other investors. In case of series 2, retail investors & HUFs will get bonds at coupon rate of 7.54 percent and other investors at 7.04 percent.

Redemption date for series 1 will be 10 years from the deemed date of allotment while 15 years in case of series 2.

Rating agencies namely ICRA, CRISIL and CARE assigned a rating of AAA for the long term borrowings programme of the company for fiscal 2013.

The funds raised through this issue will be used for lending purposes, debt servicing and working capital requirements.

Bonds are proposed to be listed on the BSE, which is also the designated stock exchange for the issue.

The book running lead managers to the issue are ICICI Securities Limited, AK Capital Services Limited, Axis Capital Limited, Kotak Mahindra Capital Company Ltd and SBI Capital Markets Limited.

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