PFC withdraws Rs 20 billion zero-coupon bond issue

Power Finance Corporation Limited (PFC) has withdrawn its proposed zero-coupon bond issuance of up to Rs 20 billion due to weak investor demand and higher-than-expected yield quotes.

The issuance was structured with a base size of Rs 5 billion and a green shoe option of Rs 15 billion. It received bids worth Rs 14.7 billion from 28 applications, with yields ranging between 6.20 per cent and 7.02 per cent. However, PFC decided not to proceed, declining the higher yield expectations.

This is PFC’s second bond withdrawal in the current quarter. On April 30, it shelved a separate Rs 6,000 crore issuance, citing weak demand caused by an oversupply of bonds in the market, which drove prices down and yields up.

By contrast, in September 2024, REC raised Rs 5,000 crore via zero-coupon bonds at an effective yield of 6.25 per cent per annum. That issue was oversubscribed nearly seven times, reflecting stronger market sentiment at the time.