
Indian banks and companies are gearing up for a busy Monday in the debt market, aiming to raise a combined Rs 13,700 crore as interest rates begin to soften. This follows a dovish tone from the US Federal Reserve last week, signaling a potential pause in aggressive rate hikes.
Leading the charge is HDFC Bank, planning to issue Rs 5,000 crore worth of 10-year, AAA-rated infrastructure bonds, with an additional Rs 5,000 crore green shoe option (additional issuance based on demand). Other prominent participants include:
- Shriram Finance: Two bond issuances – a 2-year bond for Rs 2,000 crore with a Rs 1,250 crore green shoe option, and a 41-month bond for Rs 400 crore with a Rs 300 crore green shoe option.
- Tata Projects: Two bond issuances – a 3-year bond for Rs 250 crore and a 3-year bond for Rs 900 crore.
- GMR Airports: A 3-year bond for Rs 250 crore (rated A-).
- Auxilo Finserve: A 3-year bond for Rs 25 crore (rated A+).
Market Analysis:
The recent decrease in bond yields (falling 10-12 basis points this month) and improved clarity in the market are driving investor appetite for debt instruments, particularly those with top ratings like AAA. However, liquidity concerns and a surge in IPOs are impacting sentiment for lower-rated bonds, as investors demand higher yields that issuers may be hesitant to offer.
“The government bond yield drop will surely have an impact on the corporate bond market,” says Venkatakrishnan Srinivasan of Rockfort Fincap, but the success of specific issuances like Shriram Finance’s remains to be seen.
This recent Bank of Maharashtra case (raising Rs 259 crore instead of the targeted Rs 1,000 crore) highlights the cautious approach of issuers and investors in the current market dynamics.