Corporates, FIs mobilise Rs 22,577 crore via private placement of debt

Mumbai: Corporates and domestic financial institutions (FIs) have mobilised Rs 22,577 crore through private placement of debt during the first half of this financial year. The fund mobilisation through this route was 14 per cent lower than the correspondent period last year, which stood at Rs 26,309 crore.

According to the data available from Prime Database, India's premier database on debt private placements, the Rs 22,577 crore was mobilised by 99 institutions and corporates. It may be mentioned that full 2001-02 and 2002-03 had witnessed mobilisation of Rs 45,427 crore and Rs 48424 crore, respectively.

The new Securities and Exchange Board of India guidelines issued in September on corporate bonds had an immediate impact on resource raising, as per Prime. From figures of Rs 5,944 crore in June, Rs 4,362 crore in July and Rs 5,531 crore in August, the mobilisation declined to only Rs 2,923 crore in September, most of which was also prior to the issuance of the guidelines. The fall in subsequent months is feared to be even greater.

According to Prime, compared to the same period in the previous year, the present half witnessed a huge 67-per cent increase in mobilisation by the all-India FIs and banks, up from Rs 6,829 crore to Rs 11,389 crore. Leading the pack of mobilisers in this category was IDBI (Rs 2,127 crore), followed by Nabard (1,575), Hudco (1,371) and IRFC (1330).

A decline in mobilisation came in all other sectors as per Prime. State-level undertakings (SLUs) recorded a 29-per cent fall to Rs 1,369 crore compared to Rs 1,936 crore in the corresponding period of the previous year. Most of the funds raised by SLUs continued to be for the infrastructure sector, mainly power, roads and water resources. The leader in this category was TNEB (Rs 614 crore) followed by Cauvery Neeravari (250), Rajasthan Rajya Vidyut Prasaran (120) and KHJNL (110).

A decline was also recorded, according to Prime, in the mobilisation by the private sector. The attractive interest rates in the ECB market were the major reason for this fall. The share of this sector at Rs 3,973 crore was 29 per cent lower compared to Rs 5,611 crore in the same period in the previous year.

Significantly, most of the private sector debt was of AAA-category and was raised for retirement of either old expensive debt or for acquisitions. Leading the mobilisers in this sector was BSES (Rs 375 crore), followed by Associates India (325), Citicorp Finance (300) and Sterlite Opportunities (250).

The biggest decline, as per Prime, came in the raisings by PSUs at 68 per cent. While the previous year's corresponding period had seen a mobilisation of Rs 10,420 crore, only Rs 3,295 crore was raised in the current period. Major mobilisers were Power Grid (Rs 699 crore), Nuclear Power (689) and NTPC (600). Government organisations and FIs, put together, increased their domination, mobilising a high 82 per cent of the total amount, up from 79 per cent in the previous year and 68 per cent in 2001-02.

Among government organisations, all-India FIs and banks led with a 50-per cent share, followed by a 15-per cent share by public sector units, an 11-per cent share by state FIs and a 6-per cent share by SLUs. The highest mobilisation through debt private placements during the period was by IDBI (Rs 2,127 crore), followed by Nabard (1,575), Hudco (1,371), IRFC (1,330), APPFC (1136), PGCI (699) and NPCI (689).

On an industry-wise basis, the financial services sector continued to dominate the market, collectively raising Rs 16,339 crore or 73 per cent of the total amount. Power ranked second with a 14-per cent share (Rs 3,192 crore), followed by transportation (570).

According to Prime, in addition to the above one-year tenor mobilisation of Rs 22,577 crore, a significant additional amount of Rs 5,375 crore was raised through 236 deals of less than one year tenor debentures by 48 issuers. Moreover, an amount of Rs 4,157 crore in 44 deals was raised through pass-through certificates (securitised paper).