Garner Rs 19,000 cr in Q1 as bank lending stays tepid; Rs 30,000 cr NCDs in pipeline
The patchy bank credit growth is encouraging non-banking finance companies (NBFCs) to step up their lending activities.
NBFCs raised Rs 19,000 crore of NCDs (non-convertible debentures) in the first quarter of the financial year, higher than the Rs 5,000 crore raised during the entire last financial year. They have a healthy pipeline of about Rs 30,000 crore of NCDs, which will be raised in the next few months. This would be one of the highest fund raising programmes of NBFCs through NCD issuances.
Higher yields offered by the NCDs are attracting institutional, retail and high networth investors. The major issuances during the year was the Rs 12,000 crore NCD of DHFL. In two days the company raised Rs 11,000 crore and closed the issue on the second day as HNI and the institutional investor sections got oversubscribed. Retail investors put in about Rs 800 crore in these bonds, which offered 8.5% to 9.10% rates for a tenure of three years, five years and 10 years.
Shriram Transport Finance raised Rs 3,800 crore against an initial plan of Rs 5,000 crore with heavy demand from HNIs and retail investors The bonds, to be available in three tenors of three, five and ten years, had a coupon rate of 9.10%, 9.30% and 9.40% respectively with monthly, annual and cumulative payment options and additional 0.10% for retail investors and 0.25% for senior citizens.
Ajay Maglunia, executive vice-president, fixed income, Edelweiss Finance, said, "There is a lot of interest from institutional investors, retail investors and also the HNIs. While the bank deposit rates are yet to align with the money market rates, the coupon on NCDs is an attractive option for many investors. In all the issuances this year, the institutional investor and HNI segments got oversubscribed in the first few days.
Edelweiss Finance, the non-banking arm of Edelweiss group, is raising Rs 2,000 crore through NCDs offering rates of interest of 9.45% to 9.85%, with maturities of three, five, and ten year maturities, highest interest rate offered so far on such bonds. This is also expected to attract retail investors as they are able to lock in these high interest rates for a longer period rather than depend on bank fixed deposits where the rates are still at 7.15% to 8.50%.
JM Credit Solutions, which raised Rs 750 crore, also gave attractive rates of 9.25% to 9.75% on its bonds to retail investors.
Bank credit growth was flat at 12.88% over the previous year for the fortnight June 22.
Shailesh Nerurkar, vice president, debt capital markets, Axis Bank, said, "There is a lot of interest from HNIs and retail investors. The interest rates on NCDs are also better than on fixed deposits as they range from 8.5% to 9.85%."
The debt matrix
- Rs 30,000cr
NCDs by NBFCs in the pipeline
- Rs 5,000cr
raised by NBFCs in NCDs last fiscal
Higher rates
- 9.25% to 9.75% Offered by NCDs of JM Credit
- 9.45% to 9.85% Offered by Edelweiss Finance
Big issuances
- Rs 11,000 cr
raised by DHFL
- Rs 3,800 cr
by Shriram Transport Finance
- Rs 750 cr
JM Credit Solutions
- Rs 2,000 cr
Being raised by Edelweiss Finance
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