Non-banking finance companies (NBFC) raised more than Rs 42,000 crore in the last one week through ultra-short-term debt commercial papers to fund High Networth Individuals (HNIs) for subscription in the ongoing initial public offerings (IPOs) of the companies.
NBFCs have raised Rs 42,340 crore in the last one week having a value date of December 3 and December 6, according to the data from IDBI Capital Markets and Securities. The value date is the date on which the exchange of papers and money takes place between issuers and investors. Bajaj Finance, Aditya Birla Finance, JM Financial Properties and Holdings, JM Financial Products and JM Financial Capital among others are large fundraisers through these instruments in the last one week.
Debt fund arrangers said most companies have raised funds to finance IPOs of Anand Rathi and Tega Industries. “With a bit normalcy returning and buoyancy in the general market, credit off-take at NBFC is evident and we see a lot of NBFC out there to raise resources to cater this demand,” said Ajay Manglunia, MD and Head Institutional Fixed Income at JM Financial.
Rates on these papers is almost 65 basis points higher than the rates offered on the papers maturing in three months. Usually, ultra-short-term debt papers trade higher than the normal three-month CPs. Currently, rates on the papers issued by these companies are hovering between 4.25% and 4.95%, across ratings.
Market participants expect rates on CPs to increase after the Reserve Bank of India’s monetary policy as it is widely expected that it will announce liquidity tightening measures. Additionally, market players are waiting clarity on the economic growth.
Given the uncertainties associated with the scale of economic recovery, CARE Ratings expects RBI to maintain its growth focus and continue with the accommodative monetary policy stance even as it moves towards gradual normalisation. Surplus liquidity would be managed in a calibrated manner through the conduct of VRRR auctions for varying tenors and higher quantum.