Corporate bond issuances in the last fiscal totalled ₹6 lakh crore, but the market is still dominated by private placements, a report from Care Ratings said. Of the 2,225 instruments through which the amounts were raised, only a mere eight were public placements.
The financial sector and infrastructure dominated the bond issuance, accounting for 90 per cent of the total issuances. The financial sector alone accounted for 72 per cent. About 1.76 lakh crore, or about 29 per cent of the total, was raised by the banking sector, while about 1.46 lakh crore, or about 26 per cent, was raised by financial services. Housing finance companies raised ₹1.17 lakh crore, or about 19 per cent.
The top 10 companies accounted for around 40 per cent of the total issuances, the report said. The top issuer was Housing Development Finance Corporation (HDFC), which raised ₹42,250 crore, accounting for nearly 7 per cent of the total amount raised. Other major issuers in the market included Rural Electrification Corporation, NABARD, Power Finance Corporation, LIC Housing Finance and National Highways Authority of India.
The report said that issuances amounting to 65 per cent of the total amount raised were rated AAA (triple A), while about 17 per cent were rated AA+ (double A plus) and another 7 per cent AA (Double A).
The weighted average cost for the top 10 borrowers varied between 7 per cent and 8.2 per cent during the year. These rates would, however, vary depending on the tenure of the debt raised as well as the rating of the instrument, the report said. It added that as interest rates tended to increase during the year with the G-Sec rates going up, those issuances during the latter part of the year would have been raised at a higher cost.
Published on April 13, 2018
via Bonds issued by corporates touch ₹6 lakh crore – Business Line