PFC likely to defer $200 mn ECB

NEW DELHI, DEC 12: The sharp volatility in the forex market as well as the turbulent financial markets abroad has ensured that the Power Fi...

NEW DELHI, DEC 12: The sharp volatility in the forex market as well as the turbulent financial markets abroad has ensured that the Power Finance Corporation (PFC) may now not go in for its proposed $ 200 million ECB loan.

PFC’s director finance, T N Thakur, said today that the "prevailing international market conditions would not be favourable for PFC to go ahead with the ECB now. We will review the situation next month and take a final decision on whether to tap ECB route in 1997-98."

With this, PFC joins a host of other corporates who are now spiking, or going slow, on their plans to raise debt funds abroad. The fall in the value of the rupee has resulted in a situation where it would perhaps be cheaper to raise debt locally, especially since interest rates have fallen.

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PFC sources said that the corporation is likely to tap the domestic money market and come out with Rs 250 crore taxable bonds through private placement. PFC is likely to appoint three lead managers for the proposed bonds issue and is evaluating 20 prospective banking and FIs in the country.

Other major deferments of ECBs include $ 100 million from SAIL, $ 300 million from Reliance Telecom and a similar amount from IPCL. SAIL, in fact, has instead tied up with IDBI, ICICI and some other banks to raise Rs 500 crore of domestic loans instead.

PFC sources said that the corporation is likely to tap the domestic market and come out with Rs 250 crore taxable bonds through private placement.