Indian state-run cos raise 89 bln rupees via bonds on strong demand - merchant bankers

JM Financial

23/08/2023 12:05

By Dharamraj Dhutia
       MUMBAI, Aug 23 (Reuters) - Indian state-run companies
have raised 89 billion rupees ($1.07 billion) via the sale of
bonds, amid strong interest from investors, who do not expect
major spikes in yields, while a dearth of supply recently also
aided, merchant bankers said.
    Earlier in the day, Power Grid Corp raised 12.50 billion
rupees via 10-year bonds, while Power Finance Corp raised 66
billion rupees through a combination of three-year and 10-year
papers.
    "There was demand from insurance companies and provident
funds as they have been witnessing inflows," said Ajay
Manglunia, managing director and head of the investment grade
group at JM Financial.
    Venkatakrishnan Srinivasan, founder and managing partner of
debt advisory firm Rockfort Fincap, added that absorption was
easy as "supply from state-run companies, especially at the
longer end, has come after a while".
    MTNL  MTNL.NS , too, raised 10.55 billion rupees via 10-year
bonds at a semi-annual coupon of 7.61%. The spread between this
paper and the 10-year government bond yield has shrunk to around
40 basis points (bps), down from over 50 bps during the previous
issuance in July.
     Easing government bond yields have also led to an
improvement in investor appetite on bets that yields may not
rise much from current levels, merchant bankers said.
    Indian benchmark 7.26% 2033 bond yield  IN072633G=CC  eased
to 7.19% on Wednesday, down from a more-than-four-month high of
7.26% hit last week, even though U.S. yields have jumped and
stayed elevated. 
    Meanwhile, uncertainty over state debt supply is also
pulling investors towards long-term bonds issued by state-run
companies, traders added. 
    "The yields of state-run corporates are also better compared
to state debt. This will ensure any such further issuance is
well-taken," a fixed income official from an insurance company
added. 
 
($1 = 82.8700 Indian rupees)

 (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)
 ((Dharamraj.dhutia@tr.com))