Listed corporates and lenders are scheduled to raise up to Rs 18,101 crore between September 25-26 via debt papers, according to sources aware of the matter. Of the total, about Rs 4,671 crore is scheduled to be raised on Monday.
Since the beginning of the month, banks and corporates have raised over Rs 31,000 crore till September 22. The fund raising in the next couple of days will mean that Rs 50,000 crore will be raised in September. Since the beginning of the financial year, funds over Rs 50,000 crore has been raised through the bond route thrice — in April, over Rs 52,000 crore were raised while the highest of over Rs 1 trillion happened in June.
On September 25, REC is set to raise up to Rs 2,000 crore via perpetual bonds with call option after 10 years, whereas Shree Cement will raise up to Rs 700 crore via seven year and one-month bonds. HDFC Ergo plans to raise Rs 320 crore via 10-year subordinated bonds, while Godrej Industries will raise up to Rs 500 crore via three-year and five-months bonds and NNP Constructions will raise Rs 551 crore via five-year bonds.
HDFC Bank subsidiary HDB Financial Services, meanwhile, will raise Rs 300 crore via 21-month zero-coupon bonds and another Rs 300 crore through re-issue of December 2026 bonds. These issues will be conducted on the electronic bidding platform (EBP) of stock exchanges, the sources say.
According to Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap LLP, a debt advisory firm, credit growth outpacing deposit growth, negative liquidity in the banking system, India’s government securities (G-Sec) inclusion in the JP Morgan-emerging market bond index from June 2024 leading to lower rates, and an extended pause by the banking regulator on repo rate have cumulatively led to the higher debt paper issuances on September 25 and September 26.
Srinivasan says in June, the monthly volume of primary bond issuance through private placements breached the Rs 1 trillion mark. However, the primary bond issuances were somewhat subdued post completion of the HDFC twins merger on July 1 (table below).
“AAA rated issuers are able to garner larger amounts between 7.45% to 7.80% on an annualised basis for quite some time now, which are much cheaper than bank loans. As we are at peak of interest rate cycle, we do not expect any major uptick in yields in near future. However, lower rated issuers are still finding it difficult to garner large amounts at competitive pricing,” he said.
Ajay Manglunia, MD & head at Investment Grade Group at JM Financial, shared similar views. He said that whenever there is a bit of buoyancy and improvement in yields, it results into a better appetite amongst investors and issuers, especially in the BFSI sector.
According to sources, on Tuesday, large state-owned lenders like Punjab National Bank (PNB) will raise up to Rs 3,000 crore via perpetual bonds, Canara Bank will raise Rs 5,000 crore via 10-year infrastructure bonds and NABARD will raise up to Rs 3,000 crore via five-year social impact bonds. Country’s largest lender State Bank of India on Friday raised Rs 10,000 crore at a coupon rate of 7.49% through its fourth issuance of infrastructure bonds. The issue attracted bids amounting to Rs 21,045 crore and was oversubscribed by more than 5 times against the base issue size of Rs 4,000 crore, the bank said.
“Indian bonds getting included in global indices has actually ignited the hunger for the people sitting on fence to deploy cash before yields rally too much. That is the reason we see a decent pipeline and rush to access the market before the rally doses off,” Manglunia said.
Including PNB, Canara Bank and NABARD, Tata AIG General Insurance, WAISL, L&T Finance, Kotak Mahindra Investments, Poonawala Housing Finance, Macrotech Developers and SMFG India Credit will cumulatively raise Rs 13,430 crore via various form of debt instruments on Tuesday.