Indian NBFCs double fundraising via bonds in five days as bank rate gap widens
By Siddhi Nayak and Dharamraj Dhutia
MUMBAI, May 31 (Reuters) -Indian non-banking financial companies (NBFC) have raised around 100 billion rupees ($1.21 billion) via bonds in the past five days, double that of the preceding work week, with more such issues likely as interest rates in the debt market remain low, five bankers said.
Lower interest rates for such organisations typically help bring down lending rates, which in turn can push demand up.
"There is a rate arbitrage, which the NBFCs will look to utilise between MCLR-linked bank loans and short-term capital market instruments, as short-end yields are edging lower," said Nachiket Naik, head of corporate lending at Arka Fincap, a Mumbai-based NBFC.
The Refinitiv benchmark three-year yield for AAA-rated companies is around 7.45%, down 30 basis points this fiscal year, as compared to the benchmark three-year marginal cost of lending rate for State Bank of India that stands at 8.70%.
The spread between lending rates and yields further rose as the latter eased after banking system liquidity improved.
Large borrowers over the last week include State-run IRFC, which raised 25 billion rupees and NHB which raised 20 billion rupees via over three-year bonds.
Institutions coming to market soon include HDFC, which aims to raise up to 100 billion rupees via two-year bonds, LIC Housing Finance which plans to raise 15 billion rupees through five-year bonds this week and NABARD which will raise 50 billion rupees.
Here are the details of some of the bond issues completed, as well as planned, as reported by Reuters. The list is not exhaustive.
Issuer | Tenor | Coupon (in %) | Quantum (in bln rupees) | Status |
HDFC | 2-yr | 7.8 | 100 | Bids invited |
LIC Housing | 5-yr | To be decided | 15 | Bids invited |
Shriram Housing Finance | 3-yr and 6 mnts | 8.8 | 1 | Bids invited |
Shriram Finance | 9-yr and 5 mnts | To be decided | 2 | Bids invited |
NABARD | 3-yr and 5 mnts | To be decided | 50 | Bids invited |
Poonawalla Housing Finance | 18 mnts | 8.6 | 2 | Issue completed |
Avanse Financial Services | 3-yr | 9.52 | 5 | Issue completed |
Avanse Financial Services | 3-yr and 1 mnt | 9.52 | 2 | Issue completed |
HDB Financial Services | 2-yr | 7.93 | 6 | Issue completed |
HDB Financial Services | 2-yr and 10 mnts | 7.93 | 4 | Issue completed |
Navi Finserve | 18 mnts | 9.25 | 0.75 | Issue completed |
Axis Finance | 5-yr | 7.95 | 5 | Issue completed |
L&T Finance | 5-yr | 7.9 | 1.42 | Issue completed |
L&T Finance | 10-yr | 7.85 | 2.5 | Issue completed |
Fedbank Financial Services | 6-yr and 11 mnts | 9 | 2 | Issue completed |
Bajaj Housing Finance | 3-yr | 7.78 | 5 | Issue completed |
Sundaram Home Finance | 2-yr | 7.84 | 2 | Issue completed |
IIFL Samasta Finance | 3-yr and 6 mnts | 7.85 | 1.5 | Issue completed |
IRFC | 3-yr and 5 mnts | 7.23 | 25 | Issue completed |
NHB | 3-yr and 2 mnts | 7.22 | 20 | Issue completed |
"We believe that short-term interest rates will start seeing some (more) reduction. However, banks, on the other hand, have still not fully passed on the 250-bps rate hike and we may see some uptick in rates on the bank lending side," said Sachinn Joshi, group chief financial officer at L&T Finance, that last week raised 3.92 billion rupees via bonds.
Alongside the interest rate advantage, appetite for corporate debt is also seen improving as the central bank's recent move to withdraw currency notes of 2,000 rupee denomination is expected to boost liquidity and aid shorter tenor yields.
"The increased liquidity is expected to boost savings and investments. Consequently, it is quite possible that a significant portion of the re-entered notes may end up being invested in mutual funds," said G. Pradeepkumar, CEO at Union Asset Management.
($1 = 82.7800 Indian rupees)
Reporting by Siddhi Nayak and Dharamraj Dhutia; Editing by Nivedita Bhattacharjee
Relaterade tillgångar
Senaste nytt
Ansvarsfriskrivning: XM Group-enheter tillhandahåller sin tjänst enbart för exekvering och tillgången till vår onlinehandelsplattform, som innebär att en person kan se och/eller använda tillgängligt innehåll på eller via webbplatsen, påverkar eller utökar inte detta, vilket inte heller varit avsikten. Denna tillgång och användning omfattas alltid av i) villkor, ii) riskvarningar och iii) fullständig ansvarsfriskrivning. Detta innehåll tillhandahålls därför uteslutande som allmän information. Var framför allt medveten om att innehållet på vår onlinehandelsplattform varken utgör en uppmaning eller ett erbjudande om att ingå några transaktioner på de finansiella marknaderna. Handel på alla finansiella marknader involverar en betydande risk för ditt kapital.
Allt material som publiceras på denna sida är enbart avsett för utbildnings- eller informationssyften och innehåller inte – och ska inte heller anses innehålla – rådgivning och rekommendationer om finansiella frågor, investeringsskatt eller handel, dokumentation av våra handelskurser eller ett erbjudande om, eller en uppmaning till, en transaktion i finansiella instrument eller oönskade finansiella erbjudanden som är riktade till dig.
Tredjepartsinnehåll, liksom innehåll framtaget av XM såsom synpunkter, nyheter, forskningsrön, analyser, kurser, andra uppgifter eller länkar till tredjepartssajter som återfinns på denna webbplats, tillhandahålls i befintligt skick, som allmän marknadskommentar, och utgör ingen investeringsrådgivning. I den mån som något innehåll tolkas som investeringsforskning måste det noteras och accepteras att innehållet varken har varit avsett som oberoende investeringsforskning eller har utarbetats i enlighet med de rättsliga kraven för att främja ett sådant syfte, och därför är att betrakta som marknadskommunikation enligt tillämpliga lagar och föreskrifter. Se till så att du har läst och förstått vårt meddelande om icke-oberoende investeringsforskning och riskvarning om ovannämnda information, som finns här.
