REC raises Rs 2,396 crore through 10-year bonds; SAIL gets bids at 7.95%

State-owned Rural Electrification Corporation (REC) has raised R2,396 crore through long-term bonds, according to bond arrangers.

The bonds come with a tenure of 10 years and were issued at a coupon rate of 8.30%, market participants said.

Prior to this, the company had issued bonds having a tenure of seven years at a coupon rate of 8.27% to raise R700 crore.

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However, for a 10-year bond, the company had paid a coupon rate of  8.35% earlier this year.

Compared to the rates in March, borrowing costs have come down this fiscal with a limited number of bond issues in April.

A number of companies had tried to issue bonds in March out of which some had to pay higher yields due to fiscal-end timing and liquidity-crunch while others decided to stop or postpone their issue to try for better pricing.

“The yields on PSU bonds have come down by at least eight to 10 basis points in April compared to last month. The 8.30% yield for REC’s 10-year bond can be considered as an attractive pricing, especially at a time when the benchmark yield has moved up after the RBI’s monetary policy on Tuesday,” said Ajay Manglunia, senior vice-president-fixed income at Edelweiss Securities.

Steel Authority of India (SAIL) has received bids at 7.95% for its three-year bonds, sources said, adding that the company is looking to raise R500 crore with an option to retain over-subscription of the issue.

“SAIL was also looking to issue five-year bonds, but since the bids on the three-year bond were attractive, the company decided to retain the same,” a bond arranger close to the development said.

Recently, Indian Railway Finance Corporation (IRFC) had issued short-term bonds at a coupon rate of 7.95%, which was considered an attractive pricing by market players.

Power Finance Corporation (PFC) is also looking to tap the bond markets soon to raise funds, sources said.

In March this year, the company is believed to have mopped-up R11,000 crore through the bond market, according to bond arrangers. Hinduja Leyland is also planning to raise R2,000 crore by issuing bonds, sources said.