RBI sets mark-up for power discom bonds

NEW DELHI: RBI on Thursday issued guidelines for the valuation of bonds to be issued by power distribution companies as part of the nearly Rs 1.9 lakh crore debt rejig plan for the state-run entities.

Amid rising debt liabilities of discoms, the Power Ministry had come out with a restructuring plan that would see half of their outstanding short term liabilities -- as on March 2012 -- getting converted into bonds.

The Rs 1.9 lakh crore rejig plan was aimed at improving the overall financial health of discoms. In a notification, RBI said these bonds are to be acquired by banks under special circumstances and have distinct features.

Initially, these bonds would be issued and serviced by state discoms with guarantee from respective state governments. Later, they would be issued and serviced by the state governments. According to the central bank, the bonds would carry their current "market value" if they are traded.

In case they are not traded, these bonds would be valued on "Yield to Maturity" (YTM) basis. When the bonds' liabilities are with discoms with guarantee from state government, then the YTM rate would be 75 basis points, whereas if there is no state government guarantee, the rate would be 100 basis points.

"During the period when bonds' liabilities are with the respective State Governments - 50 basis points," the notification said.

Under the financial restructuring scheme for discoms, 50 per cent of their outstanding short term liabilities -- as on March 31, 2012 -- to banks would be converted into bonds.