Pseb Issue Closes After Meeting Target

The Rs 150-core debt float of Punjab State Electricity Board (PSEB), the first issue in the post bank rate cut scenario, has closed for subscription after collecting the targeted amount yesterday.

The issue was closed after the subscription has surpassed the required amount, a merchant banker said.

Incidentally, PSEB was the first issue to hit the debt market soon after the Reserve Bank of India (RBI) has reduced the bank rate by one per cent to 10 per cent. In fact, the RBI move has triggered off a lot of postponement of corporate debt floats. Some sought to restructure their offerings whereas a few wanted a lower coupon rate.

It was widely anticipated that a lower bank prime lending rates (PLR) would lead to a new benchmark figure, lower by at least one per cent to the existing figure of 14.50 per cent.

Even in the pre-rate cut period, the Industrial Development Bank of India (IDBI) has exploited the excess liquidity in the system by raising around Rs 820 crore at a coupon of 13.5 per cent.

Naturally, the PSEB issue, rated AA (SO) by the Credit Rating Information Services of India Ltd (Crisil) with a coupon of 14.75 per cent, drew favourable response from investment bankers.

Such a high rate is highly attractive at a time when it is believed that the coupon rates are likely to decline any moment now, said one banker.

A bluechip company or a financial institution can set a new benchmark any time. The lull in the market prevailing today is an indication that corporates want to raise money at cheaper rates, he added. The seven-year maturity period coupled with redemption facilities in installments of 30 per cent at the end of fifth and sixth years, and 40 per cent at the seventh year also helped the issue to meet its target.