PFC shelves three-year bond amid elevated market yields

Power Finance Corporation (PFC) has pulled back from its three-year bond issuance, citing elevated yields in the current market environment. The decision came after the state-owned infrastructure lender received bids for the shorter-tenure security at yields deemed unacceptable by the company.

Instead, PFC proceeded with an alternative fundraising plan, successfully mobilizing ₹2,500 crore through a 15-year bond offering. The longer-dated security attracted bids at a cut-off coupon of 7.55 per cent, indicating investor confidence in PFC's credit profile despite prevailing market conditions.

The withdrawal of the three-year tranche reflects the challenging borrowing environment for Indian financial institutions, where elevated interest rates have made shorter-duration bonds comparatively expensive. Market participants have been cautious about near-term maturities given the persistence of higher yields across the debt spectrum.

PFC's decision underscores how state-owned entities are adapting their fundraising strategies to navigate current market dynamics. By shifting focus to longer-tenor securities, the lender secured funds at terms it deemed commercially viable while maintaining its capital-raising objectives.