Mumbai: Fundraising by Indian firms picked up momentum as borrowers began the week by taking advantage of a jump in cash supplies in the banking system, investment bankers said.
Overnight interest rates crashed to 10-year lows of 0.2% on 4 June, after fund supplies were boosted by Rs200 billion of inflows from the maturity of a bond, along with suspected currency intervention by RBI.
“A few issues opened late last week as firms wanted to cash in on ample fund availability in the banking system before the central bank tightens liquidity hard,” a banker said.
Merchant bankers said sentiment was expected to get subdued by the end of this week, with a string of bond issues draining cash.
The government plans to sell bonds worth Rs90 billion on 5 June, and the RBI has announced a Rs50 billion auction of market stabilisation bond schemes for 6 June.
The RBI also said it will auction Rs35 billion worth of 91-day treasury bills and Rs30 billion of 364-day T-bills on 6 June to drain excess cash from the banking system.
State-run Power Finance Corp. (PFC) will raise at least Rs1.5 billion through a bond sale, a company source said on 4 June.
Another state-run firm PowerGrid Corp. is seeking to raise to Rs15 billion through an issue offering a strip-based structure. The core size is Rs7.5 billion, with an option to retain oversubscription of an additional Rs7.5 billion.
The issue, which opened on 1 June, will close on 6 June, a banker said. The book-building range is 9.85-10.15%, payable annually. The repayment starts in equal instalments from the fourth year and continues till the end of the 15th year.
Indian Railways Finance Corp. also plans to open a 5-billion-rupee bond issue on 5 June, merchant bankers said.
“The maturities for the issue are 10, 15 and 20 years. Investors need to bid for the issue on Tuesday,” the merchant banking head of a private bank said.
State-run State Bank of India (SBI) is in the market to raise at least Rs7.50 billion through an upper Tier-II issue. The issue size could go up if SBI decides to exercise the greenshoe option.