Steel Authority of India (SAIL) has raised R420 crore at a coupon rate of 8.35% through bonds having a maturity of three years, sources said. Earlier, SAIL had issued short-tenure bonds in April at a coupon rate of 7.95%. In early May, it had put off the bond issue due to demand for higher yield by investors, said sources, indicating the company was planning to raise funds at 8.25-8.30% even as it received bids in the range of 8.43-8.72%.
“After the June 2 monetary policy review, G-sec yields have hardened and so have corporate bond yields. Considering that, 8.35% could be a good yield. However, in the next few days, we could expect the yields on corporate bonds to be in the range of 8.30-8.50% range,” said Ajay Manglunia, senior vice-president, fixed income at Edelweiss Securities.
Two subsidiaries of Power Grid Corporation (PGC) —Vizag Transmission and NM Transmission company — which were trying to issue bonds earlier, will be seeking bids on Monday to raise up to R500 crore each, sources said.
Nuclear Power Corporation of India (NPCIL) and Rural Electrification Corporation (REC) are also likely to tap the bond markets in near term, sources indicated.
The first half of May was a time when bonds had witnessed a huge sell-off globally which had pushed the yields higher. A few companies looking to issue bonds had postponed their plans due to non-conducive market conditions.
With yields having softened ahead of the June 2 monetary policy review, companies made a comeback to the market.
PGC raised close to R3,000 crore through a 15-year bond issuance with stripped payments at a coupon rate of 8.40% while Power Finance Corporation (PFC) raised R3,000 crore through short-tenure bonds at coupon rates of 8.35% and 8.39%.
However, for those companies planning to tap the bond markets after the credit policy came on expected lines, market conditions seem to have turned a bit more non-conducive. Yields have rose nearly 15 basis points after RBI said it had front-loaded the rate cut, indicating a long pause before the next trimming of rates.
“PFC and Rural Electrification Corporation (REC) were trying to tap the markets but may prefer to wait for some more time for the conditions to get more conducive,” said a bond arranger.
On Thursday, the new 10-year benchmark yields closed at 7.80% which is 16 basis points higher than the yield on June 01—the day before the policy.
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