Slew of bond issues likely to see 6 PSUs raise Rs 7,000 cr

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Mumbai | Updated: March 14, 2015 12:17:54 AM

Six public sector units (PSUs) may hit the bond markets, starting next week, to raise about Rs 7,000 crore...

Six public sector units (PSUs) may hit the bond markets, starting next week, to raise about Rs 7,000 crore, according to market experts.

National Cooperative Development Corporation (NCDC) is looking to raise around R250 crore through bonds with maturity of three years, sources said. Damodar Valley Corporation (DVC), another PSU that operates power stations in West Bengal, is set to raise R800 crore through long-term bonds.

Power Finance Corporation (PFC), which recently raised nearly R1,000 crore through the bond market, is also expected to issue bonds with medium to long terms, sources said. Nuclear Power Corporation of India (NPCIL) is looking to raise R2,000 crore through long-term bonds in the third week of March.

Indian Railway Finance Corporation (IRFC), which had recently halted the bidding on its short-tenure bond issue due to demand for higher yield by investors, may try its luck again, albeit with an issue having maturity between three and five years, according to a source. IRFC was looking to raise about R3,000 crore.

Funds

“We are looking to raise funds at a competitive pricing and, hence, are planning to issue bonds with a tenure of more than three years so that foreign investors can also participate,” a source in IRFC told FE, adding that the issue may take place in the last week of March.

RBI had issued a guideline recently stating all investments by foreign portfolio investors in the Indian debt market should be made with a minimum residual maturity of three years.

IDBI Bank, which was planning to raise infrastructure bonds worth R1,000 crore, may come back to the market next week after the issue got delayed. If the issue happens, it would be the third infrastructure bond issue by the bank this fiscal.

Prior to this, IDBI Bank had issued infrastructure bonds worth R3,000 crore in late January this year at a coupon rate of 8.725%. In mid-September 2014, the bank issued Rs1,000 crore via infra bonds at a coupon rate of 9.27%.

Bond market experts say expectations of a rate cut have dampened after the consumer price inflation data and this is showing up in the yields.

“The market is not expecting a rate cut in the near term. Bond yields are likely to remain sideways considering the not-so-positive CPI data and a general lack of liquidity in the market at this time,” said Ajay Manglunia, senior vice-president-fixed income, Edelweiss Securities.

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