Over ₹12,000 crore bond sweep by firms ahead of RBI policy verdict

Indian firms including Vedanta, Jubilant and HUDCO raised over Rs 12,000 crore from bonds ahead of the RBI's expected 25 bps repo rate cut, with strong demand from mutual funds

Several major Indian companies, including metal-to-mining conglomerate Vedanta, Jubilant Beverages, Housing and Urban Development Corporation (Hudco), and Bajaj Housing Finance, together raised more than ₹12,000 crore from the domestic debt capital market on Wednesday, ahead of the Reserve Bank of India’s (RBI’s) rate-setting panel’s policy decision, which is expected to cut the repo rate by another 25 basis points (bps).

 

Vedanta raised ₹5,000 crore in three tranches. It raised ₹2,400 crore through bonds maturing in two years and five months at a coupon rate of 9.31 per cent. It also raised ₹1,750 crore through bonds maturing in three years at a coupon of 9.45 per cent. Further, it raised ₹850 crore through bonds maturing in two years at a coupon of 8.95 per cent.

 

Proceeds from the issuance will be used by the company for general corporate purposes, including repayment or prepayment of existing debt, and for capital expenditure requirements. Major mutual fund (MF) houses and insurance companies subscribed to the anchor portion — 30 per cent — of the issue.

 

Meanwhile, Jubilant Bhartia Group, through its two companies — Jubilant Bevco and Jubilant Beverages — raised around ₹5,650 crore. While Jubilant Bevco raised ₹3,000 crore through bonds maturing in three years at a yield of 8.78 per cent, Jubilant Beverages raised ₹2,650 crore through three-year bonds at a yield of 8.65 per cent. The coupon for Jubilant Bevco bonds are 9.15 per cent and that for Jubilant Beverage bonds are 9 per cent.The anchor portion of the two tranches — ₹1,695 crore — was subscribed by major MF houses. The group was looking to raise ₹5,650 crore through bonds to part-fund its ₹12,650 crore acquisition of a 40 per cent stake in Hindustan Coca-Cola Holdings, the parent company of Coca-Cola’s largest bottling partner.

 

“Most of the issuances were in the three-year segment, which witnessed strong demand from MFs and insurance companies. The surge in banking system liquidity since April has lifted inflows into MFs, enabling them to act as anchor investors in the Jubilant and Vedanta issues. These AA-rated bonds offered attractive yields in the range of 8.65 per cent to 9.45 per cent, which appealed to MFs looking to deliver better returns to their investors,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP.

 

Last week, another major corporate, Adani Ports and Special Economic Zone, tapped into the domestic bond market to raise ₹5,000 crore through 15-year bonds at a cut-off of 7.75 per cent. The issue was entirely subscribed by state-owned Life Insurance Corporation of India. 

 

State-owned Hudco raised ₹750 crore through three-year bonds at a coupon of 6.52 per cent. Hudco was looking to raise ₹3,000 crore — ₹500 crore base issue and ₹2,500 crore greenshoe — but retained only ₹750 crore, as the company held back from accepting higher bids, possibly expecting more aggressive pricing in line with the anticipated easing cycle.

 

The RBI rate-setting body — the monetary policy committee (MPC) — is expected to cut rates by another 25 bps on Friday, according to a Business Standard poll of 10 economists. State Bank of India, however, expects a 50 bps cut. The RBI’s MPC has already cut the repo rate by 50 bps in the February and April meetings. The repo rate now stands at 6 per cent.

 

“Hudco appears to have been conservative on pricing and accepted only ₹750 crore at a cut-off yield of 6.52 per cent, well below its total issue size of ₹3,000 crore. While MFs showed greater interest in higher-yielding AA credits like Vedanta and Jubilant, Hudco’s issue stood out for its quality and received strong demand, even though the final allocation was limited due to the issuer’s yield expectations,” Srinivasan said.

 

Bajaj Housing Finance, the housing finance arm of Bajaj Finance, also raised ₹500 crore on Wednesday through bonds maturing in three years at a coupon of 7.01 per cent. Meanwhile, Rajgarh Transmission, a special purpose vehicle of GR Infraprojects, raised ₹308 crore through three-year bonds at a cut-off of 7.03 per cent.

 

 

Bond street buzz: Who raised what

 

·         Vedanta mopped up ₹5,000 crore in three tranches

 

·         Jubilant Beverages and Bevco raised ₹5,650 crore via 3-year bonds

 

·         Hudco tapped the market for ₹750 crore

 

·         Bajaj Housing Finance secured ₹500 crore through 3-year paper

 

·         Rajgarh Transmission raised ₹308 crore via 3-year bonds