 "Bond market")
Major state-owned and non-state-owned companies tapped the domestic debt capital market on Thursday, raising around Rs 17,000 crore through bond issuances.
Power Finance Corporation (PFC) raised Rs 3,340 crore at a coupon rate of 7.44 per cent via bonds maturing in five years and Rs 3,075 crore at 7.40 per cent through bonds maturing in 10 years.
Additionally, the Small Industries Development Bank of India (Sidbi) raised Rs 4,593 crore at 7.49 per cent through bonds maturing in four years and three months, though Sidbi had initially aimed to raise Rs 5,000 crore.
The National Bank for Agriculture and Rural Development (Nabard) raised Rs 4,060 crore at 7.37 per cent through bonds maturing in 10 years and three months, with an original target of Rs 7,000 crore.
Furthermore, the National Investment and Infrastructure Fund (NIIF) raised Rs 1,000 crore at an annual yield of 7.99 per cent, while consumer financier Bajaj Finance raised Rs 781.4 crore at 7.77 per cent through bonds maturing in five years.
“Nobody raised the full amount because the rates were at a slightly higher level, so they thought of getting it down to a level where they are more comfortable. There is no point in giving two-three basis points higher for raising the entire amount. And if they find it appropriate, they may come back; they still have a month,” said Ajay Manglunia, managing director and head of fixed income, InCred Capital Financial Services.
“For the next two-three weeks, the issuances will keep coming. The rates are still attractive. They have not significantly gone up; they are still affordable,” he said.
Earlier this week, National Housing Bank (NHB) raised Rs 4,800 crore at 7.35 per cent through seven-year bonds. It was aiming to raise Rs 5,000 crore, with Rs 1,000 crore as the base issue and Rs 4,000 crore as the green shoe option. Similarly, REC raised Rs 1,995 crore at 7.99 per cent through perpetual bonds. It was in the market to raise Rs 2,000 crore.
After January’s bond market turmoil, triggered by geopolitical events, large-ticket issuers have rushed to raise funds despite rising corporate bond yields due to tight liquidity and increased supply. This week, firms are set to raise over Rs 30,000 crore.
The increase in issuance supply has caused corporate bond yields to harden compared to January, when issuances were scarce. Additionally, the tight liquidity situation has led to a rise in yields on government securities, which has, in turn, put upward pressure on corporate bond yields. G-sec yields have hardened by at least five basis points post the Reserve Bank of India’s monetary policy meeting, where the six-member monetary policy committee (MPC) cut rates by 25 basis points.
