NBFCs corner major chunk of bond issuances worth Rs2 lakh crore

Indian corporations raised over Rs2 lakh crore by promoting rupee bonds within the quarter ended June 30, up from Rs1.three lakh crore a 12 months in the past, as they tried to insulate their stability sheets from uncertainties associated to the coronavirus pandemic.

Bond gross sales have been the very best in April and May, when corporations raised Rs1.47 lakh crore, adopted by Rs51,091 crore in June, in keeping with JM Financial Ltd, which compiled the info. Many top-rated corporations raised funds underneath the Reserve Bank of India’s Targeted Long Term Repo Operations (TLTRO), notably in April. Typically, the primary quarter of the fiscal is a lean one for bond gross sales.

“The quarter was different due to ample liquidity. We saw a healthy level of activity in the corporate bonds market despite the fact that government borrowing was also high. We expect the same trend to continue in the remaining quarters with wider participation,” mentioned Ajay Manglunia, head of institutional fastened revenue at JM Financial.

The rush for funds comes in opposition to the backdrop of bleak June quarter earnings. Net gross sales and revenue, adjusted for one-time revenue or loss, slumped to a 20-quarter low within the June quarter, Mint reported on Thursday. Most corporations have skipped earnings forecasts, and are chopping prices and delaying spending to create liquidity buffers for the later a part of the fiscal.

The quarter noticed giant bond gross sales by corporates, together with Reliance Industries Ltd, which raised Rs24,955 crore; Tata group (Rs5,700 crore); and L&T group (Rs11,851 crore). Mahindra and Mahindra Ltd and Crompton Greaves Consumer Electricals Ltd additionally raised funds by way of the company bond market this 12 months.

A lot of top-rated non-banking finance corporations (NBFCs) too made use of the Reserve Bank’s TLTRO. Rural Electrification Corp. Ltd raised Rs12,854 crore, Housing Development Finance Corp. Ltd Rs15,250 crore and Power Finance Corp. Ltd almost Rs23,000 crore.

In March this 12 months, RBI launched TLTRO, underneath which banks can entry three-year funds as much as Rs1 lakh crore to spend money on company bonds. This was adopted by one other spherical of TLTRO to facilitate funding to small- and medium-sized NBFCs. Banks have been mandated to deploy these funds inside 30 working days.

Banks have been the most important consumers of those bonds, whereas mutual funds stayed cautious following the meltdown in Franklin Templeton credit score danger schemes.