Mumbai, Oct. 11: The bond markets, which have been somnolent of late, sprung back to life today, fired up by a two-stage deal between Indian Oil (IOC) and State Bank of India (SBI) worth more than Rs 5,000 crore.
These bonds, which carry a yield of 6.96 per cent and mature in seven years, were issued to Indian Oil Corporation, Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) in lieu of their outstanding arrears from the oil pool account.
Senior officials from State Bank did not comment, but dealers in the market said the deal was sealed at a discount of less than 1 per cent. It is also understood that the corporation will receive the first tranche of Rs 3,000 crore by the end of this month, and Rs 2,000 crore next month.
Bond market said the 6.96 per cent offered on these bonds compares favourably with seven-year Government of India securities that carry a rate of 6.62 per cent.
Apart from Indian Oil, HPCL has sold similar bonds, valued at a little less than Rs 100 crore, this month. Even BPCL is reported to be in talks for such a placement.
There are reports that Indian Oil will use the money raised by placing the bonds with the RBI to partly repay its Rs 17,000-crore debt. There are indications the corporation is mulling a Rs 1,600-crore public issue early next year. An overseas flotation is also possible.
Among the three public sector oil refining and marketing companies, IOC was issued bonds worth Rs 5,276 crore, while BPCL was handed bonds of Rs 1,000 crore. Hindustan Petroleum was issued over Rs 1,480-crore bonds.
While bond yields have plumbed fresh lows in recent months, they have since flattened out on concerns that the Reserve Bank of India (RBI) may sell gilts from its portfolio to mop up funds from a market flushed with liquidity. The benchmark 10-year yield had, earlier this week, touched a low of 7.0785 per cent on expectations of a cut in the benchmark bank rate by the central bank in its forthcoming monetary and credit policy.
Enthused by Infosys’ stellar second-quarter numbers, investors snapped up technology shares in a buying spree that sent the Bombay Stock Exchange sensex galloping 26.28 points to close at 2995.77.
Investors made fairly heavy purchases in infotech stocks, lifting the sensex past 3000-level during the session. Foreign institutional investors (FIIs), which had been net sellers in the past few sessions, made heavy purchases in select technology names. The mood was lifted further by Hughes Software, which clocked a profit of Rs 8.3 crore. Market operators said the profit was much better than the expectations, even after making substantial provision for taxes.
The sensex opened strong at 2990.99 and rallied past the 3000-mark to its intra-day high at 3005.78, but later hovered around this psychological barrier before finishing at 2995.77 against Thursday’s close of 2969.49, reflecting a rise of 26.28 points or 0.89 per cent.
The rupee recovered partial overnight losses to close at 48.33/34 against the dollar on a day sufficient inflows of the greenback pushed up the currency. The rupee had finished at 48.34/35 on Thursday.