Many wealthy investors who have invested in DHFL's non-convertible debenture (NCD) issue are betting on a rate cut by the Reserve Bank of India (RBI). The Rs 1,000-crore issue opened only a week ahead of the RBI policy review and will list around 10 days after the policy announcement.
Although the Street expectation is of status quo on Tuesday, many NCD subscribers are hoping for a surprise cut. "The 10-year government security has rallied after the NCD was priced. So, the downside risk is minimal. However, if there is a surprise rate cut on August 9, the listing gains will be high," said a bond dealer.
Bankers start roadshows for on-tap licence
With the Reserve Bank of India issuing final guidelines for the on-tap licence to start bank, many bankers have shown interest. Sector sources say that at least two professional bankers have drawn out plans, in consultation with legal experts in the sector, to apply. They have also begun doing roadshows to raise the Rs 500 crore required as minimum capital.
Experts say the new guidelines favour competent Indian professionals who have served as bankers in India and abroad, as the number of non-banking financial institutions are limited and large corporate groups might find it almost impossible to enter.
Don't go only by debt rating
While investing in debt instruments of companies seems easier than in equities due to the fixed rate of return, investors also need to do a lot of research. With a number of debt issues likely to hit the market, experts have a word of caution.
While companies promote their issues by highlighting the ratings, it is also important to research the rating agency giving it. Some agencies tend to be liberal with these.
Also, companies have been known to reject ratings that do not suit them and highlight those that are favourable. Even distributors, who are paid good commissions, push products or highlight some features that might not provide any material benefit to investors.
