REC, Canara Bank raise Rs 10K cr via bonds; Ireda plans perpetual issue

Nabard, Sidbi to tap market this week to raise Rs 17,000 crore; Ireda eyes Rs 2,000 crore via perpetual bonds

State-owned REC, formerly known as Rural Electrification Corporation (REC), raised Rs 5,780 crore through bonds with varying tenors on Monday, while state-owned Canara Bank secured Rs 4,000 crore through Tier-II bonds, sources said.

 

Meanwhile, state-owned National Bank for Agriculture and Rural Development (Nabard) and Small Industries Development Bank of India (Sidbi) are tapping the domestic debt capital market to raise as much as Rs 17,000 crore this week, sources added.

 

On Monday, REC raised Rs 3,000 crore at a cut-off of 7.44 per cent through bonds maturing in 2 years and 11 months. Additionally, it raised Rs 2,780 crore at a coupon rate of 7.32 per cent through bonds maturing in 9 years and 11 months. REC was in the market to raise around Rs 6,000 crore.

 

Separately, Canara Bank raised Rs 4,000 crore at a coupon rate of 7.46 per cent. Furthermore, Can Fin Homes raised Rs 1,510 crore at a coupon rate of 8.20 per cent through bonds maturing in May 2027. Meanwhile, Muthoot Finance raised Rs 950 crore through bonds maturing in 2028 at a cut-off of 8.60 per cent.

 

Last week, state-owned PFC raised Rs 5,685 crore through bonds maturing in 1 year 29 days and 3 years 3 months 28 days at 7.75 per cent and 7.45 per cent, respectively.

 

“The corporate bond market is bracing for a supply-heavy week, with issuers carefully managing tenors amidst tight liquidity and persistent long-term yield pressures. Long-end yields remain under pressure due to elevated state development loan (SDL) supply, prompting issuers to rethink their approach,” said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP, adding that with demand-supply dynamics suggesting that long-duration absorption will require a yield concession, most issuers are calibrating their borrowings towards short- and medium-term maturities.

 

“Mutual funds have shown interest in high-quality short- and mid-duration bonds, while insurers and pension funds remain selective on the long end. Adding to the cautious stance is the market’s expectation of rate cuts in April and June 2025, making issuers reluctant to lock in higher yields for extended tenors,” he said.

 

This week, several large issuers are tapping the domestic debt capital market to raise funds ahead of the close of the financial year (FY25).

 

Market participants said Nabard is looking to raise Rs 7,000 crore, with a Rs 2,000 crore base issue and a Rs 5,000 crore green shoe option through bonds maturing in 3 years 5 months 26 days, while SIDBI is eyeing Rs 6,000 crore, with a Rs 1,500 crore base issue size and a Rs 4,500 crore green shoe option.

 

Meanwhile, Indian Renewable Energy Development Agency (Ireda) is planning to raise Rs 2,000 crore by issuing perpetual bonds, which have a call option in 10 years (March 2035).