Indian firms' fundraise via public bond sales to double in H2 –analysts

Sammaan Capital

21/10/2022 04:29

By Dharamraj Dhutia
       MUMBAI, Oct 21 (Reuters) - Indian corporates are likely
to raise double the amount of funds through the public issue of
bonds in the second half of this fiscal than they did in the
first, as tighter systemic liquidity and lower fixed deposit
rates make these instruments attractive, analysts said.
    "There is a vast pipeline of companies waiting to tap the
public issue route and we may see them raising around 60 billion
Indian rupees ($724.5 million) over the next four to five
months," said Ajay Manglunia, managing director and head of
Investment Grade Group at JM Financial.
    Indian companies raised around 33 billion rupees between
April and September, which merchant bankers expect will more
than double in October-March to take the overall issuances above
100 billion rupees for the fiscal.
    "With the tightening systemic liquidity situation, some
companies are not able to get larger quantum through private
placement, but get easy funding through the public issue route,"
Manglunia said.
    Adani Enterprises Ltd  ADEL.NS  is set to make its
first-ever public bond offering, aiming to raise 10 billion
rupees, while other non-banking finance companies like L&T
Finance Holdings Ltd  LTFH.NS  and Indiabulls Housing Finance
Ltd  INBF.NS  are also expected to come up with bond issuances
over the next two months.
    The recent success of National Highways Infra Trust's (NHIT)
issue, despite its longer tenor and relatively complex
structure, has bolstered expectations of similar demand from
retail investors.
    NHIT received bids worth around 49 billion rupees on the
opening day, more than triple its aim of raising 15 billion
rupees.
    "Smaller lot sizes also make these instruments attractive as
that helps to provide decent liquidity," said Venkatakrishnan
Srinivasan, founder and managing partner at debt advisory firm
Rockfort Fincap.
    Moreover, fixed deposit rates have not risen as sharply as
bond yields, making them less appealing to retail investors, say
market participants.
    "In spite of 190 basis points of rate hike by the central
bank, banks are yet to substantially increase their fixed
deposit rates to attract investors. Hence these debt offerings
are lucrative to investors," said Srinivasan.
    The AAA-rated NHIT's bonds, for example, will offer a yield
of 8.05% to investors, while State Bank of India  SBI.NS  offers
a maximum of 5.85% on its deposits.
    
 ($1 = 82.8220 Indian rupees)
 (Reporting by Dharamraj Lalit Dhutia; Editing by Savio D'Souza)
 ((Dharamrajlalit.dhutia@tr.com))