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The issue of commercial paper (CP), debt instruments through which companies raise short-term capital, is down 15% in the first half of the financial year ending March 2013, compared to the same period a year ago.
A total of 169 issuers raised Rs.1.7 lakh crore, down from Rs.2.01 lakh crore raised by 184 issuers in the first half of last year, according to data from Prime Database.
Pranav Haldea, Managing Director of Prime, said that the Reserve Bank of India’s decision to raise lending rates in mid-July had made it more expensive for companies to raise money from the market, hitting issuances.
This had pushed up the short-term rates by more than 300 basis points (or three%), making it unviable for companies to borrow from the markets, he said in a statement released by the data provider.
The companies had raised 60% of the capital by issuing debt which would give a yield of between 8 to 9% to those who held the instruments till maturity. They raised another 17% at less than 8%. Most of the money raised(65%) was for a tenure between 1-3 months.
