The lender raised just R100 crore at 9.15% in the five-year category and R600 crore at 9.2% for a tenure of seven years.
Three-year bonds are more liquid, but long-term investors, such as life insurance companies, find the seven-year paper more attractive, said Ajay Manglunia, senior vice-president and head of fixed income at Edelweiss Securities.
Given the flatness of the yield curve, it makes a very attractive investment over the next 8-12 quarters, said Lakshmi Iyer, chief investment officer at Kotak Mahindra Asset Management Company.
Investors are also buying shorter-term non-convertible debentures. Shriram Transport Finance Company's public issue of NCDs was fully subscribed on the first day and raised R1,570 crore. Umesh Revankar, managing director of the firm that finances vehicle purchases, said at least 70% of the issue was subscribed in the three-year category.
Even in public issues, the three- and five-year categories are popular as retail investors are looking for the best-possible yield in the shortest period of time, he added. Shriram Transports issue offers a yield of 11% for three years and 11.25% on the five-year bond.