PFC going slow on fund raising

Power Finance Corporation (PFC) may not be able to stick to its fund-raising plan for this financial year. The government-controlled power sector lender has deferred its $1-billion overseas fund-raising plan indefinitely.

Owing to uncertainty in the global macro-economic scenario, the non-banking financial company said its plans to raise the funds through medium-term notes had been disturbed. “We are not looking to raise the funds from overseas right now, as the market conditions are not appropriate,” said Satnam Singh, chairman and managing director. The company had not been able to decide on the timing of the issue, Singh said.

The arrangers of the issue were supposed to finish the due diligence and advise a favorable time for raising the funds. PFC was confident it would be able to stick to its targets and would borrow in dollars, despite the global situation. “We will be raising the funds in dollars,” Singh had told Business Standard.

The euro zone crisis has led to risk aversion and subsequently, dollar crunch on account of lowered confidence among investors. Unattractive deal valuations have forced Indian borrowers to pull back their foreign fund-raising plans. A minor increase in treasury yields has made things worse.

Debt arrangers said while there was a dollar shortage, a rise in treasury yields was increasing investor expectations for higher yield offering from borrowers like PFC. The US treasury yields have rebounded to two per cent, from 1.6714 per cent in September, the lowest since 1953.

On the domestic front as well, PFC has gone slow. With a target of raising Rs 6,900 crore by issuing tax-saving bonds, PFC has not charted its plans for further issuance of these bonds. “We have been able to garner less than Rs 100 crore by issuing tax-saving infrastructure bonds,” Singh said.

PFC has raised Rs 967 crore through tax-free infrastructure bonds and will be looking to raise Rs 4,000 crore through these bonds in mid-December.