Fitch assigns PFC's USD 300 mn bond final rating of 'BBB-'

Fitch Ratings today said it has assigned state-run Power Finance Corporation's (PFC; BBB-/Stable) USD300 million bond a final rating of 'BBB-'.

The bond is rated in line with PFC's Long-Term Issuer Default Rating (IDR) of 'BBB-', and the net proceeds of the bond are being used for general corporate purposes, a Fitch statement said elaborating key rating drivers.

The USD300 million Regulation S global bond offers a fixed coupon of 5.25 per cent per annum, payable semi-annually, with a maturity date of 10 August 2028 and represents the second issue from PFC's existing USD1.0 billion medium-term note (MTN) programme, it said.

On May 31, 2018, Fitch affirmed PFC's senior unsecured outstanding issues and debt instruments (including the USD1.0 billion MTN programme) at 'BBB-'. Both the programme and the bond rating are aligned with PFC's IDR as the USD300 million bond constitutes a direct, unconditional, unsubordinated and unsecured obligation of PFC and ranks pari passu with all of the company's other present and future outstanding unsecured and unsubordinated obligations.

The PFC's ratings are equalised with those of India (BBB-/Stable). This reflects PFC's strong legal status, control and oversight, moderate level of historical financial support, moderate socio-political and very strong financial implications of a potential default. PFC continues to play a strategic role in supporting India's electricity sector by acting as a focal point for the provision of capital to generation, transmission and distribution projects and entities nationally.

These factors indicate a reasonable likelihood of PFC receiving extraordinary state support, if required. The stable outlook is also in line with that on the sovereign, it added.