"We expect to have successfully completed the target of $100 million through the ECB, which closed in London on Friday. We had commitments of $92 million till Friday morning with more offers flowing in," PFC's finance director Tantra Narayan Thakur said. According to sources in the finance ministry, PFC has been able to raise the targeted amount by Friday night when the deal came to a close.

The PFC syndicated deal is of particular importance to domestic corporates with external debt plans. ANG Investment Bank lead managed the issue and at least six banks -- including the State Bank of India -- picked up a total of $75 million, PFC sources said. Twelve banksparticipated in PFC's $100-million loan syndication, which has a `put' option at the end of five years. Half of the loan was subscribed to by European investors, a third by domestic banks and the rest by south Asian financial entities. The loan also saw a small oversubscription with lead arrangers ANZ Investment Bank being extended support by the State Bank of India, which came in late as a joint arranger.

ANZ Investment Bank is reported to have taken $10 million onto its books with State Bank of India chipping in $20 million. Sources close to the transaction said that the allotments to the loan's investors will be finalised early next week.

ANZ Investment Bank had to face a few hiccups in closing the loan, investment bankers said. Despite a strong arranging group -- consisting of Fuji Bank, Skandinaviska Enskilda Banken, Arab Banking Corporation and Bank of India -- investor interest was rather weak initially for the loan, which was structured and priced before India conducted a series of nuclearblasts on May 11 and 13. State Bank of India's entry as joint arranger to the loan helped close the deal successfully.

PFC's $100-million loan is the second one raised this calendar year and follows a $50 million one in January. Earlier, in July 1997, the corporation had raised $100 million through a 12-year Eurobond issue rated Baaa3 by Moody's and priced at 135 basis points above the 10-year US Treasuries.

PFC's other major foreign currency borrowings are a $265-million loan from World Bank for power utilities' efficiency improvement programme and a $250 million loan from the Asian Development Bank. Additionally, German and French bilateral credit lines have directly funded PFC for its on-lending activities. PFC is, at present, negotiating a loan of $250 million from ADB for promoting reforms and restructuring power utilities.