RIL may raise Rs 10,000 crore from bond sale
By MYBRANDBOOK
Reliance Industries (RIL) along with banks is planning to raise ₹10,000 crore in a bond sale this week, equivalent to about a tenth of the special funding facility provided by the regulator, underscoring the possibility of top-rated and state-run companies picking up most of the amount.
The Reserve Bank of India (RBI) is lending as much as ₹1 lakh crore under Targeted Long Term Repo Operations (TLTRO) to lower yields in the secondary market and invest in primary issues. The move was announced on March 27 along with a cut in the policy rate to a record low as part of initiatives to help borrowers cope with the economic damage inflicted by the Covid-19 pandemic.
RIL is finalising details of the plan with Axis Bank, HDFC Bank, ICICI Bank and State Bank of India that could potentially feature the lowest cost of borrowing in years, said people familiar with the discussions. To be sure, the banks’ total subscription to the RIL bond sale need not necessarily be entirely from the TLTRO funds. RIL, ICICI Bank, HDFC Bank, SBI and SBI Caps did not reply to ET’s mailed queries. Axis Bank declined to comment.
Mid-sized corporates and non banking finance companies (NBFCs) fear that a substantial chunk will go to big companies and state-backed firms. With risk aversion at its peak, banks continue to shun small borrowers and lean toward triple-A-rated companies.
“Banks have a clear arbitrage here as they could park the money at least 260 basis points higher rate,” said Ajay Manglunia, managing director and head of fixed income at JM Financial.
"While the absence of mark-to-market obligation makes it more attractive for banks, corporations too avail cheaper money,” he concluded.
The spread or differential between the benchmark bond and top rated corporate papers narrowed to 80-90 basis points immediately after the March 27 emergency rate cut from 150-200 basis points. A basis point is 0.01 percentage point.
The domination of big firms and state-run companies may crowd out smaller borrowers.
“There is little chance of me getting funds from banks through this TLTRO,” said the chief executive of an NBFC. “If a PFC (Power Finance Corp) and I go for funds to a bank, it is obvious who the banker would prefer.”
The Reserve Bank of India conducted a third TLTRO on Thursday, when another Rs 25,000 crore entered the system. Lenders could raise money at just 4.40%. Banks are mandated to invest half of the sum from TLTRO in primary investment grade corporate bond sales.
"
Singapore to remove One-Time Passwords from Bank Accounts
According to the Monetary Authority of Singapore, clients who utilise secur...
Is 375 million Airtel subscribers database breached?
When a hacker claims to have accessed and put up for sale a customer databa...
The government of India intends to construct a single portal f
A single portal will be launched by the Indian government to list all of it...
OpenAI offers GPT-4o, a faster model available to all users at
GPT-4o, a faster and more sophisticated AI model, is made available to all...
Icons Of India : CP Gurnani
Former Managing Director and CEO of the well-known IT service company ...
Icons Of India : B.V.R. Subrahmanyam
A 1987 batch (Chhattisgarh cadre) Indian Administrative Service Office...
ICONS OF INDIA : SACHIN BANSAL
Sachin Bansal is an Indian entrepreneur. He is best known as the found...
PFC - Power Finance Corporation Ltd
PFC is a leading financial institution in India specializing in power ...
ITI - ITI Limited
ITI Limited is a leading provider of telecommunications equipment, sol...
GeM - Government e Marketplace
GeM is to facilitate the procurement of goods and services by various ...
Indian Tech Talent Excelling The Tech World - Vinod Dham, Founder & Executive Managing Partner, IndoUS Venture Partners
Vinod Dham, known as the “Father of the Pentium Chip,” has left an...
Indian Tech Talent Excelling The Tech World - Sundar Pichai, CEO- Alphabet Inc.
Sundar Pichai, the CEO of Google and its parent company Alphabet Inc.,...
Indian Tech Talent Excelling The Tech World - JAY CHAUDHRY, CEO – Zscaler
Jay Chaudhry, an Indian-American technology entrepreneur, is the CEO a...