Indian companies are expected to raise 100 billion rupees through bonds

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MUMBAI: In view of liquidity stress and low rates of fixed deposits, Indian corporates are likely to raise twice as much money through bonds in the last six months as compared to the first six months of the current financial year. Bonds are becoming an attractive instrument for investors due to low rates of fixed deposits.

In the next four to five months, Indian companies expect to raise approximately Rs 60 billion through public offerings, according to a research firm's report. In the period from April to September of the current financial year, Indian companies have raised an amount of Rs 33 billion through public offerings of bonds, while from October of the next year It is expected to raise Rs 100 billion in the full fiscal year, with another Rs 60 billion expected by March.

Currently some companies are unable to raise large amounts of money through private placement due to liquidity constraints, but it is becoming easier for them to raise money through public offerings.

Companies are keeping the size of the lotus of bonds small to allow more retail investors to participate, an analyst said, to make the bond offering successful.

Apart from this, retail investors are preferring to invest in bonds due to lower returns on fixed deposits as compared to bonds.

Although the Reserve Bank has increased the lending rate by 190 basis points, it is seen that the banks are not increasing the deposit rate accordingly. Deposit growth in the banking system has also been sluggish.

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