PGCIL Fund Raising Via Cash Bonds
The board of Power Grid Corporation of India (PGCIL) has given the green light to raise Rs 2,200 crore by issuing cash bonds.
This means they are getting financial support by borrowing money through the sale of these cash bonds.
On Friday, the board of the Maharatna power PSU, Power Grid Corporation of India (PGCIL), gave the green signal to raise Rs 2,200 crore through bonds.
In a meeting held on July 29, 2023, the company’s committee of directors for bonds approved a plan to raise to Rs 5,700 crore in the financial year 2023-24.
This funding will be carried out in several stages to support the company’s capital expenditure needs, offer inter-corporate loans to wholly owned subsidiaries/Joint Ventures (JVs), and for general corporate purposes, as outlined in a regulatory filing.
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WHAT ARE CASH BONDS / CORPORATE BONDS
Companies issue bonds as a way to borrow money, and they do this by selling these bonds to individual or institutional investors who become known as bondholders.
When someone buys a corporate bond, they are essentially lending money to the company for a specific period and, in return, receiving regular interest payments at a fixed rate.
When the bond reaches its maturity date, which is the end of the agreed period, the investor gets back the entire amount they initially invested.
This original amount is also known as the “face value” of the bond. It’s like a promise from the company that they will pay back this specific amount when the bond matures, assuming they don’t run into financial trouble.
However, it’s important to note that the face value doesn’t always reflect the actual value of the bond in the market.
The value of bonds can change on the secondary market due to factors like demand, supply, interest rates, and other market conditions.
So, you might find a bond selling for less than its face value, and in such cases, it’s considered to be sold at a discount. On the flip side, if a bond is selling for more than its face value, it’s said to be sold at a premium.
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