Steel Authority of India (SAIL) will raise Rs 500 crore through three-year bonds at a coupon rate of 8.25%, sources said.
“SAIL had kept an upper cap of 8.30% against which it was able to get a coupon rate of 8.25%. This shows that the investor demand was robust,” a bond arranger said, adding that the issue got bids worth R1,300 crore.
Prior to this, the company had issued three-year bonds in early June at a coupon rate of 8.35%, while in the first part of April, it paid 7.95% for bonds of the same tenure. Yields were down in early part of April because of huge demand from mutual fund houses due to availability of rollover funds from fixed-maturity plans.
However, by early June, yields started trending upwards due to the hawkish tone of the central bank regarding future interest rate cuts. The Reserve Bank of India had said it front-loaded the rate cut, indicating there would be a long pause before another reduction.
Ajay Manglunia, senior vice-president, fixed income, Edelweiss Securities, said corporate bond yields have come down by 10 to 15 basis points for maturities till three years. “For bonds with tenure of more than three years, yields are yet to come down. The Reserve Bank of India’s monetary policy in the first week of August will be crucial in setting the tone for future trajectory of yields,” he said.
Nuclear Power Corporation of India will seek bids from arrangers on July 29 for its long-term bond issue through which the company is looking to raise between R2,500 crore and R3,500 crore.
Bond market experts also expect Indian Railway Finance Corporation (IRFC) to come out next week with its tax-free bond issue worth R1,800 crore through the private placement route.