Private placement of corporate bonds continues to see traction in June

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Published: July 8, 2020 12:45 AM

As a result, bond issuances during the first quarter of FY2021 stood at Rs 2.09 lakh crore, having risen over 28% compared to the same period last year.

Bond dealers said the funds from the central bank’s targeted long-term repo operations ruled the bond market during April and May, when bulk of the issuances were in the short-tenor category.Bond dealers said the funds from the central bank’s targeted long-term repo operations ruled the bond market during April and May, when bulk of the issuances were in the short-tenor category.

Private placement of corporate bonds continued to see traction in June, with issuances lingering over the Rs 70,000-crore mark during the month, data put out by the Securities and Exchange Board of India (Sebi) revealed. As a result, bond issuances during the first quarter of FY2021 stood at Rs 2.09 lakh crore, having risen over 28% compared to the same period last year.

Bond dealers said the funds from the central bank’s targeted long-term repo operations ruled the bond market during April and May, when bulk of the issuances were in the short-tenor category. June began seeing long-tenor issuances making a comeback. Issuers like NHAI, NABARD and IRFC had raised 15-year money during June, according to Bloomberg data. Dealers said with interest rates remaining low and long-term investors gradually beginning to approach the market, many public sector units were hitting it to raise long-tenor money.

Ajay Manglunia, MD and head of institutional fixed income at JM Financial, said many PSUs started approaching the corporate bond market to raise long-term funds in June. “In a low interest environment, many of these PSUs could be looking to issue long-term money that suits their needs. Moreover, long-term investors like insurers and pension funds had been staying away from the corporate bond market in the earlier part of the first quarter. These investors gradually started approaching the market in June, thereby boosting long-term issuances in the month, unlike in April and May, when mostly short-tenor issuances were seen,” Manglunia said.

Some of the PSU names continue to hit the market in July as well. For example, IRFC raised Rs 3,000 crore via 15-year bonds at 6.73% during the first week of July. Similarly, BPCL also raised close to Rs 2,000 crore from the corporate bond market through five-year paper.

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