The Telegraph
Since 1st March, 1999
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Grasim reaps rate gains in bond flotation

Mumbai, Jan. 7: Riding piggy-back on the interest rate tumble, Grasim Industries is raising Rs 100 crore through seven-year bonds that will yield investors 6.08 per cent and come laced with five-year put and call options.

Debt market watchers say the issue, which has been underwritten by HDFC Bank, ICICI Securities and Standard Chartered Bank, will open on Friday and set the pace for other firms that want to borrow cheap. “The rate could also set a benchmark for others looking to raise funds at attractive rates from the primary bond markets,” an analyst added. Yields on corporate bonds have dipped over 200 basis points since the start of this financial year, when an AAA-rated company was forking out 8.55 per cent on five-year bonds.

Dealers say while spreads between corporate bonds and government securities have come down 30-40 basis points, instruments floated by companies have not seen the kind of rally experienced by gilts last fortnight. The churning has sent yields on 10-year government paper dipping to an unprecedented low of 5.98 per cent.

With the markets looking for direction, analysts say trends in the corporate bond market will be heavily influenced by rate swings in government securities.

Gilts prices — which move in opposite direction to the yield — slipped today following talk of an open market operation by the Reserve Bank of India (RBI). Analysts feel this could keep the markets range bound this week. Last year, the central bank had converted Rs 20,000 crore of adhoc treasury bills into dated securities of varying maturity. There are fears it may now come out with another gilt-soaking operation to cool what many have said is an overheated government bond market. At the auction held on Monday, the RBI had fixed a cut-off yield of 6.05 per cent for the 12-year paper.

NTC bonds

National Textiles Corporation (NTC) will issue bonds worth Rs 250 crore to finance VRS for its mill-workers, textiles minister Kashiram Rana told PTI in Delhi today.

“We plan to issue bonds worth Rs 250 crore as the fourth tranche for raising funds to finance VRS for NTC workers later this month. This amount would be in addition to the Rs 500 crore that we raised last year from the issue of government guaranteed bonds,” he added.

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