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Banks rush to raise funds via corporate bonds

November 29, 2022

Banks rush to raise funds via corporate bonds
Indian banks have been rushing to raise funds in the last few days through corporate bonds as demand for credit has soared. The move is also aimed at locking in lower rates, dealers said.

“Banks are rushing to raise funds with available options due to increasing growth opportunities. There is huge peer competition amongst banks to raise funds through FDs and rates are increasing there too. Only bonds are still trading within a range for the last few months, with attractive pricing for top credit-rated banks,” said Venkatakrishnan Srinivasan, Founder and Managing Partner of debt advisory firm Rockfort Fincap.

The yields on corporate bonds have eased over the last few days tracking the fall in yields on government securities (G-Secs). The 10-year corporate bonds that were trading at 7.65-7.68 percent on November 14, have now eased to 7.50-7.55 percent.

Currently, yield on the 10-year benchmark 7.26 percent-2032 government bonds is at 7.2685 percent.

In the past two weeks, some banks have raised more than ₹5,000 crore through bonds of various tenures, data on the bidding platform showed.

According to market participants, IDFC First Bank is planning to raise ₹1,500 crore through Basel-III Tier-II bonds on November 29, while Kotak Mahindra Bank is planning to raise ₹1,500 crore via 84-month bonds on November 30.

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