Fresh floats on cards

CORPORATE BONDS

A few more primary issues are likely to hit the market this week including Tier-II issues of Syndicate Bank, Industrial Development Bank of India (IDBI) and the Infrastructure Development Finance Corporation (IDFC).

Dealers said, for the first time in the nine months of the current fiscal, the market is witnessing a slew of primary issues amounting to Rs 850-950 crore, and that to with a fixed-rate coupon and for a longer tenure.

Dealers added that issuers, even after deciding on their borrowing plans, had to wait for long for the underlying government securities yield to stabilise.

Now that the interest rates have more or less remained rangebound, they do not want to lose the opportunity.

Commercial papers have started emerging once again as a short-term fund raising instrument for corporates. Banks' investment in commercial paper as on November 26 stood at Rs 3,824 crore, a growth of Rs 55 crore over the March figure of Rs 3,770. Remarkably, investments by banks in commercial paper have turned positive after a long time.

Recap: While the five-year government security was ruling at 6.36 per cent, PFC was offering bonds at 7 per cent to raise Rs 100 crore (along with a greenshoe option) and HDFC at 6.95 per cent for Rs 200 crore.

Dealers said the recent surge of liquidity backed by FII inflows is helping corporates raise funds at a spread of 50-60 basis point to sovereign paper.