INSUBCONTINENT EXCLUSIVE:
Mumbai: Mint Street wants the bond market to be the preferred fund-raising choice for local companies seeking debt financing, but Corporate
from the year-ago period: Firms raised ?13,400 crore in 55 issuances until April 24, show data from Edelweiss that sources information from
Prime Database, a Delhi-based analytics company
In April last year, companies had raised ?26,700 crore.
Most corporates sell shorter-duration bonds, with one-to-five-year maturities
Rates in the short end of the yield curve have risen after New Delhi said it would borrow more of short-term debt as part of a broader
programme to reduce federal indebtedness
up significantly in shorter maturity government bonds
income at IDFC Mutual Fund
fouryear sovereign paper and the repo rate has widened to 175 basis points
It was just about 115 basis points even about three weeks ago
Even that gap was much higher than recent historical averages.
In past two weeks, top-rated Small Industries Development Bank of India
(SIDBI) has tried three times to tap the bond market but aborted the bond programme after investors sought higher rates
Similarly, National Bank for Agriculture and Rural Development (Nabard), too, failed twice to find buyers for its debt paper at rates
Ajay Manglunia, EVP Head fixed income markets at Edelweiss Financial Services
now have to raise money through the electronic bidding process on exchanges
The move is aimed at bringing more transparency to debt financing.
Interestingly, the gap between a four-year bond and 30-year bond has
narrowed to just about 25 basis points from about 50 to 60 basis points as recently as in the last quarter
Such a flat curve is unjustifiable from a macro standpoint and is drastically pushing up borrowing costs for corporates despite the repo
should reverse the trend.
