Category: Bonds

ESAF Small Finance Bank to raise ₹135 crore via bonds on private placement basis

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Thrissur-based ESAF Small Finance Bank Ltd on Monday (March 11) said its board of directors has announced plans to raise funds up to ₹135 crore through the issue of bonds on a private placement basis.

The bank’s board has approved the proposal to issue listed, rated, taxable, unsecured, transferable, redeemable, fully paid-up, Basel II Compliant Lower Tier II subordinated bonds. These bonds will be in the form of non-convertible debentures (NCDs) and will be issued on a private placement basis, according to a stock exchange filing.

“We hereby inform that the Board of Directors of the Bank, in its meeting held on Friday, March 08, 2024, has, inter alia, considered and approved the proposal to raise funds by way of issuance of Listed, Rated, Taxable, Unsecured, Transferable, Redeemable, Fully Paid-Up, Basel ll Compliant Lower Tier ll Subordinated Bonds in the form of Non-Convertible Debentures (Tier ll Bonds), aggregating upto ₹135 crore (One Hundred and Thirty-Five Crores) on a Private Placement basis,” the bank said.

This decision was made during a board meeting held on Friday, March 8, 2024.

ESAF Small Finance Bank reported an over three-fold increase in net profit at ₹112 crore for the third quarter ended December 2023 on account of improvement in core income. The bank had posted a net profit of ₹37 crore for the year-ago period.

Total income increased to ₹1,094 crore in the December quarter from ₹782 crore a year ago, the bank said in a regulatory filing. Interest income also improved to ₹974 crore from ₹701 crore in the third quarter of the previous fiscal.

Net interest income rose to ₹597 crore from ₹451 crore in the corresponding period of the preceding year. On the asset quality front, the bank recorded an improvement with gross NPAs (non-performing assets) declining to 4.16% from 7.24% at the end of the December quarter FY23. Similarly, net NPAs also declined to 2.19% from 3.73% in the previous year.

Shares of ESAF Small Finance Bank Ltd ended at ₹59.49, down by ₹9.56, or 13.85%, on the BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Citi India sees bond yields declining to 6.5% if RBI signals rate cuts

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Bagree, Head of Markets at Citi India believes that bond yields, just given the current demand supply dynamics, can go down to 6.8%.

“In fact, we think if you know, if RBI starts cutting rates or gives an inclination that rate cutting is on the horizon. I think it can go down even further to maybe 6.50%,” Bagree told CNBC-TV18.

India’s 10-year treasure yield was around 7.03% on March 7.

Indian bonds have already rallied 5% this year, with inclusion in not just the JPM Index, but also in the Bloomberg index.

The prospect of index inclusions is expected to attract substantial passive and active flows, with an estimated influx of $25 to $35 billion into the Indian bond market.

Read Here | Citi expects big year for India M&As with capital flowing from far and wide

The corporate bond spreads have remained tight post-COVID. This influx is likely to benefit corporate bonds as well.

Bagree said, “Corporate bonds are also going to benefit, there will be a crowding in of investment in corporate bonds, because a lot of the supply will be taken over by foreign investors. And so from a local investor perspective, they will be able to deploy that in corporate bonds. So I do expect corporate bond yields to also come down, maybe not as much as the government of India bonds but definitely yes.”

Surendra Goyal, Head of Equities Research at Citi India, expressed optimism regarding the capital expenditure (capex) sector, emphasising the gradual but steady recovery post-COVID.

He noted that while the recovery has been slow, all the necessary preconditions for capex have been met, signaling a favorable environment for investment in this sector.

In terms of the rupee’s outlook, Bagree remained optimistic but cautioned against expecting significant appreciation. He anticipated a surplus of $45 to $50 billion in India’s balance of payments next year, potentially prompting the RBI to bolster its reserves rather than allowing for substantial rupee appreciation.

Watch this video for more. 

Also Read | India likely to bank on higher capex to accelerate growth, say sources

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s inclusion in Bloomberg EM bond indices FAQs: Effective date, eligibility conditions and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bloomberg announced on Tuesday, March 5, that India’s Fully Accessible Route (FAR) bonds will be included in the Bloomberg Emerging Market (EM) Local Currency Government Index and related indices.

This inclusion will be take place over a 10-month period, starting January 31, 2025, with an initial weight of 10% of their full market value.

This comes about five months after JP Morgan had announced that it would include India in its widely-tracked emerging market debt.

Here are FAQs on this new inclusion by Bloomberg:

[faq][ques]Which indices will the Indian FAR bonds be included in, and what is the timeline for their inclusion?[/ques][ans]Indian FAR bonds will be included in the Bloomberg EM Local Currency Government indices, with an initial weight of 10% of their full market value. The weight of these bonds will be increased in increments of 10% of their full market value every month over the 10-month period ending in October 2025. The indices include the Bloomberg EM Local Currency Government Index, the Bloomberg EM Local Currency Government Index 10% Country Capped Index, and all related sub-indices.[/ans][/faq]

[faq][ques]Why is India not eligible for inclusion in other Bloomberg indices, such as the Global Aggregate Index, at this time?[/ques][ans]India continues not to be included in the Bloomberg Global Aggregate and related indices. Bloomberg is actively monitoring market developments in India with a view to understanding the compatibility of FAR bonds with the Global Aggregate. The decision to include or not is influenced by market complexities, unique local practices, and scale issues.[/ans][/faq]

[faq][ques]What conditions need to be satisfied for India to be included in the Global Aggregate Index?[/ques][ans]Various factors need consideration, including repatriation challenges, capital gains tax approvals, short trading windows, account opening processes, funding challenges with margin requirements, and custodian readiness.[/ans][/faq]

[faq][ques]Is the inclusion of India bonds in the EM bonds index permanent, and what could lead to their exclusion?[/ques][ans]The inclusion is subject to the investability of these bonds and unforeseen operational hurdles. A significant reduction in investability or other operational issues that hinder investors from replicating index returns could lead to exclusion.[/ans][/faq]

[faq][ques]How often will changes to the indices be made once India bonds are fully included?[/ques][ans]The Bloomberg EM Local Currency Government Index and related indices are rebalanced monthly on the last business day, as outlined in their methodologies.[/ans][/faq]

[faq][ques]What factors led to the inclusion of India bonds in this index, and has there been any change in regulation or market structure that enabled this?[/ques][ans]India’s efforts to enhance accessibility, including the FAR programme, extended trading hours, alternative margin posting methods, and improved account registration, contributed to the decision. Bloomberg has been discussing India’s inclusion for the past four years, with the recent market consultation initiated based on client feedback during the Bloomberg 2023 Fixed Income Index Advisory Councils.[/ans][/faq]

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bloomberg to add India to EM bond indices from Jan 31, 2025

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In DBS Bank, a flow in of $3-4 billion is expected due to inclusion in Bloomberg EM bond index. Inflow will be lesser as the inclusion is in the EM index and not the BBG global bond index.

Ashhish Vaidya, Managing Director and Head of Treasury and Markets, DBS Bank India said, “This is a Bloomberg Emerging Market Index, so it has a much smaller AUM under consideration. We expect atleast $3-4 billion to come in because of this inclusion. The larger index is the global Bloomberg index. Market was speculating earlier that India will be included as a part of the global index, so if that was the case the amounts would have been much larger.”

In Kotak Mahindra Mutual Funds, a $2.5-3 billion flow in is expected with the inclusion in Bloomberg index.

Lakshmi Iyer, Kotak Mahindra AMC said, “This is the emerging market part of the Bloomberg index where the total incremental amount will be roughly about $2.5-3 billion. The Bloomberg aggregate where the total size is over $3 trillion, probably this could be a baby step in the making. But any form of inclusion is welcome. When the announcement ab-initio happened, the market was speculating that it will be larger index first and that would have shrunk the bond yields to as low as 7%, but small steps are always a happy thing to be.”

She added, “It also coincides at a time where Indian currency is having a dream innings in terms of being the most stable currency across the world in the last 18 months. So from a long to medium term perspective it would still have a positive rub-off effect on bond yields which will get much more attractive from a foreign investors standpoint.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IRB Infrastructure to raise up to $550 million via foreign currency bonds

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IRB Infrastructure Developers Ltd (IRB) on Thursday (February 22) said its board of directors has approved a fundraise of up to $550 million through foreign currency bonds.

“(The) Management Administration and Share Transfer Committee of the Board of Directors has approved, subject to satisfactory completion of procedural conditions including the issuance of any offering circulars, the issuance of foreign currency-denominated notes, including US$-denominated bonds either secured or unsecured, rated or unrated, listed on any stock exchanges in India, any international stock exchange outside India, for an aggregate amount of up to $550 million,” the company said.

It added the bonds will be issued via public or private placement, on a preferential allotment basis, in one or more tranches/series to eligible investors, including non-resident qualified institutional buyers, financial institutions, banks, non-banking financial companies, incorporated bodies, mutual funds, individuals, trustees, etc.

IRB Infrastructure Developers reported a 32.49% rise in its consolidated net profit to ₹187.42 crore for the quarter ended December 2023. The company had clocked a net profit of ₹141.35 crore during the year-ago quarter, IRB Infrastructure Developers said.

Its total income during October-December 2023 rose to ₹2,077 crore from ₹1,570 crore a year ago. The firm’s expenses increased to ₹1,783 crore from ₹1,351 crore.

Shares of IRB Infrastructure Developers Ltd ended at ₹67.10, up by ₹1.50, or 2.29%, on the BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bank of Baroda raises ₹2,500 crore via Basel III compliant tier II bonds

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-owned Bank of Baroda on Thursday (December 21) said it raised ₹2,500 crore on December 20, 2023, through the issuance of Basel III compliant tier II Bonds Series XXV.

The bank received a total of 88 bids amounting to ₹6,803 crore against the base issue size of ₹1,000 crore (which translates to 6.8 times the base issue size) and a greenshoe option to retain oversubscription up to ₹1,500 crore.

The bank accepted bids for ₹2,500 crore at a coupon of 7.75% per annum, according to a stock exchange filing.

These bonds are unsecured, listed, rated, subordinated, non-convertible, taxable, and redeemable, having a tenure of 10 years from the deemed date of allotment with a five-year call option.

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The allotment of these bonds took place on December 21, 2023. Under Basel-III capital regulations, banks globally need to improve and strengthen their capital planning processes.

Bank of Baroda reported an operating profit of ₹8,020 crore, up 33% from the year-ago period. The lender’s profit after tax came at ₹4,253 crore, up from ₹3,313.4 crore in the corresponding period in the previous year. As per a CNBC-TV18 poll, the PAT was projected as ₹3,921.5 crore. The bank had reported a net profit of ₹4,070.1 crore for the April to June 2023 quarter.

The lender’s net interest income or NII — the difference between the revenue generated expenses that occurred during the period — rose 6.5% to ₹10,831 crore. This was below the estimated ₹11,058.8 crore. In the July-September quarter last year, the NII came at ₹10,174.5 crore.

Also Read: Cochin Shipyard wins Defence Ministry contract worth ₹488 crore

Shares of Bank of Baroda Ltd ended at ₹224.75, up by ₹5.55, or 2.53%, on the BSE.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

HDFC Bank raises ₹7,425 crore via bonds for infrastructure and affordable housing projects

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s largest private sector lender HDFC Bank on Wednesday (December 20) announced the successful mobilisation of ₹7,425 crore through the issuance of non-convertible bonds.

The bank, via a private placement, issued 7.71% unsecured, redeemable, long-term, fully paid-up, non-convertible bonds in the form of debentures. This strategic funding initiative aims to support crucial infrastructure and affordable housing projects.

The regulatory filing confirmed the issuance of 7,42,500 bonds, each with a face value of ₹1 lakh. The funds generated through this issuance will be directed toward funding initiatives that contribute to the development of infrastructure and affordable housing projects.

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HDFC Bank reported a 9.3% rise in net profit at ₹15,976 crore for the quarter ending September 2023 compared to CNBC-TV18 poll’s forecast of ₹14,616.5 crore. The bank’s net interest income (NII) for the quarter stood at ₹27,385 crore, slightly below CNBC-TV18’s projected NII of ₹28,187.4 crore.

The lender also disclosed key asset quality metrics, including gross non-performing assets (GNPAs) at ₹31,578 crore, representing 1.34% of gross advances, and net NPA at ₹8,073 crore, accounting for 0.35% of net advances. Additionally, the bank set aside provisions totalling ₹2,904 crore.

HDFC Bank’s return on assets (RoA) was reported at 1%, annualised at 2% for the first half of FY24. The net interest margin was at 3.4%, while the core net interest margin stood at 3.65%. The bank’s pre-provision operating profit reached ₹22,694 crore. The gross advances stood at ₹23.54 lakh crore.

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Shares of HDFC Bank Ltd ended at ₹1,656.20, up ₹3.15, or 0.19%, on the BSE.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sebi plans to introduce ‘fast track’ concept for public issuance of debt securities

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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To deepen the bond market, the Securities and Exchange Board of India (Sebi) is looking to introduce the concept of ‘fast track’ public issuance for debt securities and further reduce the face value of debt securities, including non-convertible debentures, issued on a private placement basis to ₹10,000 from ₹1 lakh at present. If implemented, the move would also promote ease of doing business.

“The main intention of a fast track public issuance of debt securities is to facilitate frequent issuers with a consistent track record, to make public issues of debt securities with reduced time, cost and effort,” Sebi said in its consultation paper.

To further enhance the participation of non-institutional investors in the corporate bond market, Sebi has “proposed to permit issuers to launch NCDs (non-convertible debentures) or NCRPS (non-convertible redeemable preference shares) with the face value of ₹10,000.”

However, in such cases, the issuer should appoint a merchant banker who would carry out due diligence for the issuance of such privately placed NCDs and NCRPS and disclosure requirements in the private placement memorandum, Sebi said.

Further, such debt securities should be plain vanilla with a simple structure and should not have any credit enhancements or structured obligations, it added. This came after Sebi in October 2022 cut the face value to ₹1 lakh from ₹10 lakh earlier. The decision, along with the mainstreaming of Online Bond Platforms (OBPs) has helped enhance the participation of non-institutional investors in the bond market.

During the period from July to September 2023, it was observed that non-institutional investors subscribed to 4% of the total amount raised as compared with the general average of less than 1%. Besides, the total volume of trades undertaken on the OBPs aggregates to around Rs 333 crore by 1974 users (investors), Sebi noted.

Further, the regulator has suggested the requirement of appointment of a merchant banker in case of issuance of Securitised Debt Instruments (SDIs) at a face value of ₹10,000.

Sebi suggested that instead of inserting the audited financials for the last three financial years and Stub period financials in the offer document, the same should be allowed to be provided as a QR code scanning which opens the web link to the financials on the issuer’s website.

Further, details of certain information required for the current year such as Related Party Transactions (RPTs), and remuneration of directors among others to be specified as required up to the latest quarter. Also, Sebi has suggested that record dates should be standardised 15 days before the due date of payment of interest or redemption.

The regulator has “proposed to consider, like equity issuance, an avenue to debt issuers to make the issuance of public issues on fast-track basis”.

Suggesting modalities, Sebi said that the need to seek comments from the public on a draft offer document for fast-track public issues should be reduced to two working days. Also, it proposed that the timeline for listing fast-track public issues of debt securities should be T+3 as opposed to T+6 for a regular public issue, a move aimed at considerably bringing down the timelines for raising funds through debt securities.

The issuers opting for the route should be allowed to utilize electronic modes to advertise the public issue and the requirement of advertising in newspapers should be done away with. Such issues should be kept open for a minimum of one working day and a maximum of 10 working days.

It has been proposed that the requirement for minimum subscription for banks and entities in the financial sector, when undertaking issue through the route, should be abolished.

Further, the retention limit should be fixed at a maximum of five times of base issue size to provide more flexibility to the issuers in terms of fundraising. The Sebi has sought comments from the public till December 30 on the proposals.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bank of Baroda to issue infrastructure bonds of up to ₹5,000 crore in first tranche

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bank of Baroda on Friday (November 24) said it has decided to issue infrastructure bonds of up to ₹5,000 crore in the first tranche for a tenure between seven to 10 years. The announcement follows the lender’s earlier disclosure of intending to raise infrastructure bonds amounting to ₹10,000 crore. This initial tranche comprises a base issue of ₹1,000 crore, supplemented by a green shoe option of up to ₹4,000 crore, Bank of Baroda said.

Infrastructure bonds serve as crucial financial instruments utilised by various entities within India, including governments, banks, and authorised infrastructure companies. They play a pivotal role in funding diverse developmental projects across the nation.

Typically, they come with a lock-in period of five years during which investors cannot sell the bonds However, post the lock-in period, investors have the flexibility to trade these bonds on stock exchanges like the National Stock Exchange (NSE) or BSE.

Participation in infrastructure bond investments is open to all Indian citizens above 18 years of age, as well as Hindu Undivided Families (HUF).

Experts say that issuance of these bonds fuels infrastructural development and presents a decent investment avenue for individuals seeking stable returns.

Investors require a Demat account and a PAN to trade in infrastructure bonds. They can apply for these bonds in the physical form too and require a self-attested PAN card. They need to have identity and address proof as part of the KYC (Know Your Customer), procedure.

At the time of writing this report, the shares of Bank of Baroda were trading 0.05% higher at ₹194.40 on the BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jio Financial Services in talks with merchant bankers for maiden bond issue

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jio Financial Services is in early talks with merchant bankers for its maiden bond issue, four bankers told Reuters on Monday. The company may look to raise ₹5,000 crore ($600.6 million) to ₹10,000 crore through the issue and may tap the market in the last quarter of this financial year, the bankers added.

Jio Financial, which was carved out of Reliance Industries, is in the process of  getting its credit rating and other necessary approvals, they said. The bankers declined to be identified as they are not authorised to speak to the media, while Jio Financial did not immediately reply to Reuters’ email for comment.

The company, which was listed in August, plans to establish itself as a full-service financial services firm in a rapidly growing market, including auto, home loans and other products, competing with the likes of Bajaj Finance.

“Jio Financial has got a strong promoter parentage and it is expected that the company will automatically get AAA credit rating,” said Venkatakrishnan Srinivasan, founder and managing partner at Rockfort Fincap.

“While the pricing will depend on factors like tenor and balance sheet size of the company at the time of issue, being an NBFC, it will be 10-20 basis points higher than RIL.” Earlier this month, Reliance Industries raised 200 billion rupees via 10-year bonds in the largest issue by a non-financial Indian firm, paying 40 basis points more than the government’s borrowing cost.

Ahead of the bond issue, bankers have recommended that Jio Financial issue shorter-term commercial papers and put bank borrowing lines in places to establish pricing, said two bankers.

It has also been recommended to issue bonds not longer than five-year maturity, according to four bankers.

“Since the company is new, the documentation and compliance will take time, and we could see them coming in before end of March” a merchant banker with a private bank said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow