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Indian corporations raised a document Rs 7.67 lakh cr in native bond gross sales

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Mumbai: Indian corporations, led by index bellwethers Reliance Industries, HDFC Ltd and Larsen & Toubro, raised a document Rs 7.67 lakh crore in native bond gross sales final yr, benefiting from the bottom value of borrowing at dwelling and serving to Mint Road obtain its said goal of steering debt-seeking corporates away from banks.

Sovereign backed Food Corporation of India, National Highway Authority of India and two state-run telecom companies suppliers have been additionally among the many giant native entities that collectively raised Rs 7,66,781 crore final yr, about 12 per cent greater than what they did in 2019, information compiled by JM Financial confirmed.

“Record-low interest rates prompted many large companies to prefer the local market to that overseas,” mentioned Ajay Manglunia, managing director- fastened earnings at JM Financial. “Surplus liquidity in the system paved the way for record-high local bond sales in a single calendar year as subscribers were looking for credible borrowers.”

RIL, India’s largest firm by all standard metrics, greater than trebled its bond gross sales to Rs 24,955 crore in 2020. India’s mortgage-lending pioneer, HDFC Ltd, raised Rs 53,860 crore, four per cent greater than what it had bought a yr earlier.

Last yr, the benchmark bond yield dropped about 70 foundation factors following cuts within the central financial institution’s coverage price that reached document lows. The bond gross sales coincide with a concerted central financial institution transfer to deepen India’s company bond market because it seeks to de-risk the bank-dominated lending system towards inevitable enterprise cycles.

Last yr’s bond gross sales have been pegged at 7.5 per cent of the overall financial institution credit score of Rs 105 lakh crore.

Since March final week, the Reserve Bank of India infused an estimated Rs 2.43 lakh crore by way of an array of liquidity home windows together with Targeted Long Term Repos (TLTROs) and Long Term Repos (LTROs). During the final calendar yr, the central financial institution slashed the repo or the speed at which banks borrow quick time period cash from RBI, by about 140 foundation factors.

Larsen & Toubro, too, greater than doubled its calendar-year bond gross sales to Rs 11,350 crore. State Bank of India (SBI) bought Rs 27,431 crore value of bonds, in contrast with Rs 13,170 crore a yr in the past.

“The pattern may change this yr if the abroad market turns comparatively extra profitable because the requirement for brand spanking new cash goes as much as assist development,” Manglunia mentioned.

Meanwhile, abroad company bond gross sales practically halved by way of 2020. About two dozen Indian corporations collectively raised $14.01 billion, down from $26.5 billion in 2019, ET reported on December 24. .

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