State-Run Firms Raise ₹77.5 Billion via Bonds Following Dovish RBI Policy

A decline in corporate bond yields in the secondary market, following the Reserve Bank of India’s dovish monetary stance, has encouraged three state-run firms to raise approximately ₹77.50 billion ($880.5 million) through bond sales, according to sources familiar with the matter. Hindustan Petroleum Corporation Ltd. (HPCL) plans to raise around ₹50 billion, while Bharat Petroleum Corporation Ltd. (BPCL) aims for ₹20 billion, with both companies targeting five-year maturity bonds.

North Eastern Electric Power Corp (NEEPCO), a wholly-owned subsidiary of NTPC, is expected to raise ₹7.50 billion through bonds maturing in five to eight years. While BPCL recently accessed the debt market six months ago, NEEPCO and HPCL had raised funds through bond issuances in May 2024 and March 2023, respectively. Sources noted that NEEPCO had been awaiting the central bank’s policy update and is likely to move first among the three issuers.

The Reserve Bank of India, while maintaining status quo on policy rates earlier this month, highlighted lower inflation levels that create room to support economic growth. With retail inflation dropping to an eight-month low and expectations of record-low readings in October, bond markets rallied, causing AAA-rated shorter-duration corporate bond yields to fall by 6-10 basis points. Bankers expect corporate bond issuances to pick up in the coming months as easing yields attract both issuers and investors.

Pic Courtesy: google/ images are subject to copyright