Fund-raising by India Inc through private placement of debt securities or bonds surged to a four months high of over Rs 23,500 crore in October.
According to the data available with the market regulator Securities and Exchange Board of India (Sebi), companies garnered a total of Rs 23,567 crore from debt on a private placement basis route through 150 issues.This was the highest amount raised in by companies through private placement of debt securities since July when they had garnered Rs 35,214 crore through the same route.
“In the corporate debt market, Rs 23,567 crore were raised through 150 issues by way of private placement listed at BSE and NSE during October 2013 compared to Rs 17,763 crore raised through 128 issues in September 2013,” the Sebi noted. In August, companies had mopped-up Rs 2,089 crore via debt placement route, making it the lowest amount raised by the firms in a month since February 2006, when they had garnered Rs 1,084 crore.
According to experts, the fund raising increased in September after new Reserve Bank of India Governor Raghuram Rajan announced measures to boost the weakening rupee and revive economic growth. With the latest fund mobilisation, overall capital raised through private placement of debt securities reached Rs 1.66 lakh crore in the first-seven month period of the current financial year against Rs 3.61 lakh crore mobilised in the entire last financial year (2012-13).
Meanwhile, Sebi on Thursday asked depositories to ensure that foreign institutional investments in ‘credit enhancement bonds’ remain within the permitted level of $5 billion. Companies issue ‘credit enhancement bonds’ to obtain better terms for their outstanding debt. Earlier this month, the Reserve Bank allowed Foreign Institutional Investors (FIIs) and Qualified Foreign Investors (QFIs) to invest in credit enhancement bonds up to a limit of $5 billion, of the overall limit of $51 billion earmarked for corporate debt.
In light of the RBI decision, Sebi has now asked depositories to monitor FII/QFI investments in credit enhanced bonds, so as to ensure that their aggregate investments remain within this specified limit. In a circular issued to FIIs and the two depositories, NSDl and CDSl, Sebi said that depositories will first ensure that investments by FIIs/QFIs in such bonds do not exceed 90 per cent of the $5 billion limit, that is $4.5 billion. The depositories have been also asked to jointly publish the aggregate investment of FIIs/QFIs in Credit Enhanced Bonds, to public, on a daily basis.