Tata Capital, IIFCL line up debenture issues.
The corporate bond market for retail investors is expected to see some hectic activity after many years, with a host of companies such as Tata Capital and the state-owned Indian Infrastructure Finance Company Ltd (IIFCL) planning to float such issues soon.
Tata Capital plans to raise Rs 500 crore through issue of non-convertible debentures with an option to keep oversubscription up to another Rs 500 crore. It is for the first time in many years that any company is taking this route to raise money.
Tata Capital is raising Rs. 500 crore with an option to keep over subscription up to Rs. 500 crore. The issue is offered to retail investors as well as institutions and company
While the company is expected to fix the coupon rate in the next couple of days, source in the bond market expect it at 11-11.5 per cent. Tata Motors, another group company, is offering 11 per cent rate for its fixed deposits.
Tata Capital Chief Financial Officer Govind Sankaranarayanan, said that the Tata brand name will help the company get a good response from retail investors.
Another company, whose bond issue for retail investors is awaited eagerly, is IIFCL. The company’s tax-free bonds, expected in next one or two months, could become one of the largest bond issuances open to retail investors in many years.
IIFCL has already opened the issue for institutional investors and has offered 6.85 per cent tax-free rate for a five-year bond issue.
Yet another company waiting in the wings is the Gujarat government’s infrastructure venture, Gujarat Infrastructure Finance and Tech Citi {GIFT}. The company is planning to raise money through bonds offered to retail investors.
Sources said the lacklustre equity market has made sure that there is a growing preference among retail investors to invest in bonds. Corporate debts have been raised in the recent past, but most of them have been through private placements.
After October’s liquidity crisis, mutual funds are also staying away from floating Fixed Maturity Plans (FMPs), which are predominantly debt schemes. Many FMPs having 13-month maturity were floated in March 2008 and are due for redemption in April.
Rama Vasanthrajan, head, fixed income, Crisil, said the bond market is becoming attractive with falling interest rates and retail investors should look at investing either in bond issues or in debt schemes floated by mutual funds.
