Low Rates Spawn Mop-Up Rush By Aaas

Triple A (AAA)-rated corporates are out in the market. They are utilising the softer interest rate scenario to raise money. In the first half of this calendar year, these corporates have raised over Rs 1,200 crore.

The list of corporates which have raised money includes Great Eastern Shipping Co (Rs 90 crore), Bharat Petroleum Corporation Ltd (Rs 345 crore bond issue at 9.95 per cent coupon), Indian Aluminium Co (Rs 50 crore), Hindustan Petroleum Corporation Ltd (Rs 500 crore), Tata Sons (Rs 100 crore), Associate India Financial Services (Rs 75 crore).

Double A (AA)-rated Mahindra & Mahindra (M&M) also raised Rs 120 crore. "Mostly corporates are raising money in order to pay off their expensive debt. At a time like this, when the rates are so soft, it is the right time to raise money in order to pay off the existing costlier debt," said a senior banker with a foreign banker.

GE Shipping has raised Rs 90 crore to acquire a new asset while BPCL has raised money to fund long term capital expenditure (capex). "With good results and their core focus still in place, it will get oversubscribed," said an analyst.

"Raising money can be done for various reasons such as funding capex or asset acquisition programme or to service costlier debt. We raised this as we had an asset-specific need to fund," said a spokesperson from GE Shipping.

Even the private placement market is booming. "With a good market, the subscription is bound to be good," the banker added. Asian Paints, also a triple A-rated corporate, prefers the CP (corporate papers) market for its short term funding and does not borrow for the long term from the market.

With interest rates expected to come off even further keeping with global trends, more issues are expected to come to the market in order to raise money.