Nbfcs Planning 90-Day Cps At 9-11% Interest
Leading non-banking finance banking companies (NBFC) like Apple Finance, Kotak Mahindra Finance, Alpic Finance and Lloyds Finance have lined up 90-day commercial papers with an interest rates at 9-11 per cent.
The money which will be raised at 10 per cent level will be lent out at 15 to 16 per cent levels, allowing the NBFC a spread of 5-6 per cent. Apple Finance is planning to launch its maiden commercial paper next week. It will raise Rs 10 crore ranging between 10 per cent and 10.5 per cent, based on the conditions prevailing in the money market, through the 90-day paper.
Sources at Kotak Mahindra said the company intends to come out with 90-day CPs in multiples of Rs 5 crore as much as the market can absorb. The rates are expected to vary between 10 per cent and 11 per cent and the issues will be spread during May. While the non-banking financial companies are now testing the markets by issuing commercial papers of small sums, they are likely to resort to them more often to raise cheap funds, particularly during easy money market conditions. The rates at which they mobilise funds will be in tandem with money market rates.
Alpic Finance, too, is working on the details of its commercial paper programme which is expected to be launched over the next few weeks and has approached the rating agencies for a credit rating of its programme. Market sources said Lloyds Finance is also planning its commercial paper, though the details are not known. Anagram Finance has been accorded with a rating of P1+ for its commercial paper issue up to a limit of Rs 25 crore .
In fact, the NBFCs are offering are higher rates than being offered by AAA-rated corporates mainly because of the risk factor. Top corporates like Larsen and Toubro (L&T) and Thermax have mobilised funds through 90-day CPs at rates ranging from 9.5 per cent to 9.75 per cent.
Players are testing the market by issuing commercial papers of small sums and are likely to resort to them more often to raise cheap funds