IREDA scraps proposed green bond sale amid tepid response

Published: December 28, 2018 2:00 AM

India Renewable Energy Development Agency had planned to raise Rs 250 crore through 10-year bonds.

Dealers said another private sector bank also raised Rs 3,000 crore through infrastructure bonds.

By Utsav Saxena

India Renewable Energy Development Agency (IREDA) on Wednesday scrapped its proposed green bond sale amid a tepid response from market participants. IREDA had planned to raise Rs 250 crore through 10-year bonds.

However, HDFC Bank’s Rs 6,000-crore infrastructure bond issue was fully subscribed at a coupon of 8.44%. Housing and Urban Development Corporation also raised Rs 930 crore at a coupon of 8.23% through three-year bonds. Dealers said another private sector bank also raised Rs 3,000 crore through infrastructure bonds.

Mutual Funds bought papers maturing in 2020 and 2021 segment for their fixed maturity plans. The demand was mainly for papers issued by LIC Housing Finance and Housing Development Finance Corp (HDFC).

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On the other hand, the secondary market has struggled recently with yields on corporate bonds falling up to 10 basis points in the current week. “There is a slowdown in the secondary market mainly due to the large supply in the primary market and a large number of treasury dealers are on leave because of the festive season”, said a treasury dealer.

The investors usually prefer buying bonds through the primary market because of the flexibility it gives them to negotiate on the rates and the quantum of purchase.

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The yield on the benchmark bond on Thursday rose to 7.28%, up two basis points from the previous close. A sharp increase of more than 8% in the price of brent crude to $54.21 a barrel on Wednesday was attributed as the main reason for a fall in bond prices.

The rupee fell 29 paise to 70.35 against the greenback on Thursday. Brokers said the US dollar firmed up against major global currencies following easing of tensions between the White House and the Fed, which calmed investors’ nerves.

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