COUNTRY REPORT INDIAThe move comes as the Employees’
Provident Fund Organization has suffered
losses in the past year on investments in
the INFRASTRUCTURE LEASING & FINANCIAL SERVICES
group of companies and DEWAN HOUSING
FINANCE CORP (DHFL), which were rated AAA a
few years ago.
EPFO has been seeking an early
redemption of DHFL bonds valued at
Rs7bn and has been struggling to recover
Rs5.74bn from the IL&FS group, according
to local news reports.
The board has approved an early
redemption option on the DHFL bonds.
The move by India’s pension fund
was expected by market participants as
it has stayed away from private sector
bonds in the past few months, but “the
announcement can affect debt market
sentiment at the margins,” said a DCM
banker.
For investments in bonds of public sector
undertakings, EPFO will consider one of the
two required ratings from Crisil, Care, Icra
and India Ratings.
The board has also approved the
appointment of portfolio managers SBI
Mutual Fund and UTI Asset Management to
invest the funds managed by EPFO.
› GHMC PAYS HEAVY PRICE
GREATER HYDERABAD MUNICIPAL CORP has fixed the
yield at 10.23% on a 10-year municipal bond
issue that fell far short of its fundraising
goal, according to a filing on National
Securities Depository Limited.
It raised only Rs1bn compared to its
Rs3.05bn target and paid 85 basis points to
133 basis points more than on its last two
issues, despite the cumulative 110 basis
point cut in interest rates by India’s central
bank since February.
The rate cuts have only benefited
AAA rated issuers and the municipal
corporation’s notes are rated AA by Care
and India Ratings. “GHMC raised the bonds
at a steep yield because of low risk appetite
for AA credits in general,” said a DCM
banker.
The interest on the bonds will be paid
semi-annually.
The deal is GHMC’s third municipal bond
issue. In February last year it raised Rs2bn
from 10-year bonds at 8.9% and in August
the same year it raised Rs1.95bn from 10-
year bonds at 9.38%, payable semi-annually.
SBI Capital Markets is the arranger of the
bond issue.
GHMC is planning major capital
expenditure on skyways, elevated
corridors, multi-level flyovers and road
development to ease traffic congestion in
Hyderabad, the capital of southern India’s
Telangana state.
› HDFC PRINTS 10-YEAR BONDS AT 7.91%HOUSING DEVELOPMENT FINANCE CORP has raised
Rs20bn from 10-year bonds at 7.91%,
according to a filing on National Securities
Depository Limited.
The housing finance company was eyeing
Rs5bn, plus a greenshoe option of Rs45bn.
Crisil and Icra have assigned a AAA rating
to the secured notes.
On June 19, HDFC issued Rs50bn three-
year bonds at 7.87%.› INDIA RELAXES MUNI BOND RULESIndia’s market regulator has relaxed the
rules governing municipal bonds and
allowed a broader range of institutions to
issue them.
Urban development authorities, city
planning agencies and pooled finance
development funds which plan and
execute urban projects will be able to print
municipal bonds.
The Securities and Exchange Board of
India has removed the requirement to
maintain a monitoring agency, to have a
separate project implementation cell to
monitor projects, to maintain 100% asset
cover and to receive the backing of state or
central government to issue muni bonds.
A detailed project appraisal report is not
necessary before filing the offer document
for a public issue.
The regulator has mandated different
types of escrow accounts such as no-lien
escrow account, interest payment account
and sinking fund account to enhance
investor protection.
Sebi said it will widen the provision
regarding preparation of accounts and
will revise the timelines for submission of
annual and half-yearly financial results,
without providing details.
India’s municipal bond market has had a
slow start. After Pune opened the market in
June 2017, Bhopal, Indore, Greater Hyderabad
and Great Visakhapatnam municipal
corporations have managed to raise a total of
only Rs12.89bn from muni bonds.› LIC HOUSING RAISES RS20BN FROM BONDSLIC HOUSING FINANCE has raised Rs20bn from
three-year three-month bonds at 7.6%,
according to a filing on National Securities
Depository Limited.
Crisil and Care have assigned a AAA
rating to the bonds maturing on November
22 2022.
The housing finance company was eyeing
Rs5b, plus a greenshoe option of Rs20bn.
On July 23, the housing finance company
raised Rs12bn from September 2022 bonds
at 7.85%.› NCDC SELLS NOVEMBER 2022 BONDSNATIONAL COOPERATIVE DEVELOPMENT CORPORATION
has raised Rs4.5bn from November 2022
bonds at 8.16%, according to a market
source.
NCDC was targeting Rs2.5bn plus a
greenshoe option of the same amount from
the bonds.
The notes are rated AA by Crisil and
Care, and AA+ by India Ratings.
NCDC is yet to make an official
announcement on the final yield and size
of the issue.› REC PRINTS 15-YEAR BONDS AT 8.18%REC, formerly known as Rural Electrification
Corporation, has raised Rs50.63bn from 15-
year bonds at 8.18%, according to market
sources.
The issuer was eyeing Rs5bn, plus a
greenshoe option of Rs50bn.
Care, Crisil, Icra and India Ratings have
assigned AAA ratings to the notes.
REC is yet to make an official
announcement on the final size, yield and
tenor of the bond issue.› SHRIRAM ANNOUNCES RETAIL YIELDSSHRIRAM CITY UNION FINANCE has announced
yields to raise up to Rs10bn from a public
issue of bonds, according to its prospectus
on the BSE.
The effective yields are 9.54%, 9.69% and
9.84% for two, three and five years, payable
annually. The yields are 9.55% and 9.70% for
two and three years, payable cumulatively.
The yields are 9.70% and 9.86% for three
and five years, payable monthly.
The non-banking financial company is
eyeing Rs1bn, plus a greenshoe option of
Rs9bn from the public issue.
The issue opened on August 21 and
closes on September 19.
The bonds are rated AA+ (stable) by Crisil
and Care.
AK Capital Services and Edelweiss Financial
Services are the lead arrangers.
The proceeds will be used for financing
activities.› SREI EQUIPMENT EYES RETAIL BONDSSREI EQUIPMENT FINANCE has announced the
coupons on a public issue of bonds to raise
up to Rs5bn.
The coupons are 10.01%, 10.25%, 10.40%
and 10.65% on 13-month, two, three and
five-year tranches, payable annually. It is
eyeing Rs1bn, plus a greenshoe amount of
Rs4bn.
An added incentive of 25 basis points
will be offered to all investors who were