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Power Grid Corporation of India's board committee has approved raising up to ₹3,800 crore through a private placement of unsecured taxable bonds. The funds will support the company's capital expenditure and long-term projects, reinforcing its role in India's power transmission infrastructure.
Power Grid Corporation of India announced that its board committee has given the go-ahead for a fundraising initiative totaling up to ₹3,800 crore. This significant amount will be raised through the private placement of unsecured taxable bonds, specifically named POWERGRID Bonds – LXXXIII (83rd Issue) 2025-26. The bond issuance will have a base size of ₹1,000 crore, complemented by a green-shoe option that allows for an additional ₹2,800 crore to be raised if market demand is strong. These bonds are slated for listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), offering liquidity to investors. The bonds will be redeemable at par, meaning they will be repaid at their face value, in 10 equal annual installments, with interest payments made on a yearly basis. The precise coupon rate, which is the interest paid to bondholders, will be determined through a competitive bidding process on the Electronic Book Provider platform. Power Grid emphasized that these bonds are unsecured and do not carry any special rights or privileges. The company also confirmed a clean track record, stating there have been no recent delays or defaults on its existing debt instruments. Power Grid Corporation of India, a major state-owned entity, regularly taps the bond market to finance its substantial capital expenditure and ongoing long-term projects crucial for the nation's power transmission network. The company plays a pivotal role in strengthening grid reliability and facilitating renewable energy integration across India. As of Monday, Power Grid's shares were trading 0.9% higher, reflecting a year-to-date gain of 11%.
Impact
This bond issuance is a positive development for Power Grid Corporation of India, providing essential capital for its growth and infrastructure development plans. It also presents an investment opportunity for bondholders in a stable, state-run entity. The move supports the broader Indian energy sector by ensuring continued investment in critical transmission infrastructure.
Rating: 7/10
Definitions
Private Placement: The sale of securities directly to a select group of institutional investors or high-net-worth individuals, rather than offering them to the general public.
Unsecured Bonds: Bonds that are not backed by any specific collateral. Their repayment relies solely on the issuer's general creditworthiness.
Green-shoe Option: An option that allows the underwriter of a security issuance to sell more shares or bonds than initially planned if there is high demand from investors.
Coupon Rate: The annual interest rate paid on a bond, calculated as a percentage of the bond's face value.
Redeemable at Par: Indicates that the bond will be repaid by the issuer at its face value (par value) on its maturity date. For these bonds, repayment occurs in 10 equal annual installments.
Capital Expenditure (Capex): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. These are investments in the company's long-term growth.
