India's state-run Power Finance Corp (PFC) has locked in terms for another dollar-denominated debt sale, marking its second offshore bond issuance in less than a month, according to two bankers familiar with the matter. The move comes as the lender continues to take advantage of a subsidized hedging facility introduced by the Reserve Bank of India in June. Main Developments PFC will raise $300 million through three-year dollar bonds at a spread of 110 basis points above the Secured Overnight Financing Rate (SOFR), with the coupon payable quarterly. The issue is set to settle on Thursday. This follows a five-year dollar debt sale in June, where PFC raised a lower-than-planned $300 million at a spread of 105 basis points over U.S. Treasuries, yielding 5.327%. Bankers had said accepting a larger quantum would have pushed coupon rates higher. Read also: PTA Slams Rs740m in Fines on Mobile Firms for SIM Fraud Background PFC was the first non-bank lender to tap the RBI's subsidized hedging facility for overseas borrowings and remains the only one to have used this route so far. The facility, announced in June, allows external commercial borrowings by banks and state-run companies to qualify for subsidized hedging, thereby reducing the cost of managing currency risk. Private lenders HDFC Bank and Axis Bank have already raised an aggregate of $1.55 billion via bonds using the same facility in June. The RBI's move aims to encourage more Indian entities to borrow abroad by lowering hedging expenses. Why It Matters The subsidized hedging window is designed to make dollar borrowing more attractive for Indian state-run firms and banks, potentially easing domestic credit supply and reducing reliance on local funding markets. PFC's repeated use of the facility signals confidence in the mechanism, though the limited participation—only one non-bank lender so far—raises questions about broader adoption. What's Next With the latest issue settling on Thursday, market participants will watch for further issuances from other state-run entities, especially those in infrastructure and power sectors. The RBI may also evaluate the facility's impact and consider adjustments if uptake remains narrow. PFC has not commented on future borrowing plans.