Huge Appetite For Corporate Paper

The National Thermal Power Corporation (NTPC) had an outage today, albeit of a different, pleasant kind. It received offers for Rs 4,705 crore when it went to Bond Street to raise Rs 300 crore. This kind of oversubscription is unheard of in the corporate bond market.

In a parallel development, Tata Chemical is mopping up Rs 60 crore through a split 90-day commercial paper issue, with interest rates ranging between 6.4050 per cent and 6.42 per cent.

The liquidity overhang in the system pulled down the secondary market yield of both corporate and government paper today. The five-year 7.95 per cent Hindalco paper which was traded at 7.85 per cent till yesterday, today dipped to 7.75 per cent. Yields on government paper fell by 8-10 basis points across the maturity spectrum.

The Rs 300 crore NTPC issue, which carried a greenshoe option of Rs 200 crore, was oversubscribed by over 14 times today. The issue which hit the market on Wednesday, carries a coupon of 8.05 per cent, payable annually. The redemption of the bond will be in two instalments in the fourth and fifth years.

Tata Chemical has already raised Rs 50 crore from the market via three separate deals. The Tata group company yesterday placed Rs 10 crore with a general insurance company at a coupon rate of 6.42 per cent. This morning, it struck a Rs 25-crore, 90-day deal with a life insurance company at a coupon rate of 6.4050 per cent. In the afternoon, the company raised another Rs 15 crore by placing a three-month paper with a private bank at 6.42 per cent. The coupon rates were the lowest ever in the commercial paper market. The issuer is yet to raise the balance Rs 10 crore.

Meanwhile, Rabo India Finance launched a Rs 25 crore five-year floating rate paper. The paper will have a put and call option at the end of three years. The coupon of the paper will be pegged 150 basis point over the semi-annualised one-year government paper yield as given by Reuters. The coupon rate will be reset after every six months.

The PowerGrid Corporation