 "Banks, Indian companies set to raise Rs 13,700 cr through bond market")
Banks and Indian companies are set to raise Rs 13,700 crore through various debt instruments on Monday as interest rates started softening after the US Federal Reserve’s dovish tone last week.
HDFC Bank will on Monday invite bids for its infrastructure bonds with a basic issue size of Rs 5,000 crore and a green shoe option of an additional Rs 5,000 crore.
These bonds, rated AAA, will have a tenor of 10 years.
Shriram Finance will be issuing two bonds — the first will have a tenor of 2 years and an issue size of up to Rs 2,000 crore, including a green shoe option of Rs 1,250 crore.
The second issuance will span around 41 months with an issue size of up to Rs 400 crore, inclusive of a green shoe option of Rs 300 crore.
Tata Projects will also be issuing two bonds — the first with a tenor of 3 years, having an issue size of Rs 250 crore. The second one will have a 3-year tenor with a larger issue size of Rs 900 crore.
More From This Section
GMR Airports, rated A-, will be issuing a 3-year tenor bond to raise Rs 250 crore.
Lastly, Auxilo Finserve, rated A+, will be issuing bonds with a tenor of 3 years and an issue size of Rs 25 crore.
“Yields are failing, and coupons have become better. There is clarity in the market and once yield is failing, the investors’ appetite becomes better.
In uncertain times, investors are confused whether the yields are increasing or whether they will go further up,” said Ajay Manglunia, managing director (MD) and head (institutional fixed income), JM Financial.
The yields have fallen 10-12 basis points (bps) across tenors in December.
Investor appetite for bonds is currently skewed towards top-rated ones, with liquidity tightness and a surge in initial public offerings (IPOs) impacting market sentiment, said participants.
“The AAA-rated bonds have been getting good response from investors. However, for the bonds rated AA+ and lower, investors are expecting higher yields, which the issuers are not ready to pay,” Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP said.
“We’ll have to see how the bidding goes for Shriram Finance. The government bond yields have fallen. This will surely have an impact but we’ll have to see how that pans out for the corporate bond market,” he added.
Bank of Maharashtra raised Rs 259 crore through tier-II bonds at 7.99 per cent on December 12. The bank was aiming to raise Rs 1,000 crore but total bids received were just above Rs 500 crore and that too at higher rates. The bonds have been rated 'AA+' by CARE and Acuite Ratings.
Market participants said that investors were looking for higher rates at around 8.5 per cent. However, Bank of Maharashtra decided to stick with 7.99 per cent. This is due to hesitance to pay a higher rate, leading to a cap on the raised amount.