Fund raising via NCDs rises 5 times to Rs 21,000 cr in Apr-Jul

As many as seven companies raised over Rs 21,000 crore through issuance of debentures during April-July period of the ongoing fiscal, a surge of nearly five times from the year-ago period.

The funds have been mobilised for business expansion, supporting working capital requirements and other general corporate purposes.

As per latest data with market regulator Sebi, Kosamattam Finance, Muthoot Finance, Srei Equipment Finance, Dewan Housing Finance Corp, JM Financial Credit Solutions, Shriram Transport Finance Company and ECL Finance together mopped up Rs 21,048 crore through retail issuance of non-convertible debentures (NCDs) during the period.

This was in comparison to three companies collecting Rs 3,681 crore through this route in the same period in 2017-18. Overall, firms had garnered about Rs 4,950 crore in the entire preceding fiscal.

Muted demand for qualified institutional placements (QIPs), lukewarm secondary market and apprehension over a sustained rise in interest rates attracted companies towards debentures, market experts said.

Over a dozen firms have announced plans to raise funds through NCDs, which are loan-linked bonds that cannot be converted into stocks and usually offer higher interest rates than convertible debentures.

Individually, Dewan Housing raised Rs 10,945 crore in the period under review as against a target of Rs 3,000 crore, Shriram Transport garnered Rs 3,648 crore against a target of Rs 1,000 crore and Muthoot Finance raked in Rs 3,000 crore against a base size of Rs 500 crore.