Reliance issue oversubscribed

Easy liquidity in the system helped Reliance to pick up twice the target amount through its private placement of 14.5 non-convertible debentures. According to one of the arrangers for the issue, the AAA rated instrument was completely sold out within two days of opening and managed to collect around Rs 200 crore. The five-year paper had no put or call option and the minimum application of Rs 1 crore restricted the investor profile to banks and institutions.

IRFC sails through

IRFC has mobilised over Rs 180 crore through its tax-free bonds. The response to the issue, say market sources, is in sharp contrast to the previous tax-free bonds issued in January. At a time when AAA rated institutions are tapping the market with a coupon of around 13.5-14 per cent, the yield of 13-14 per cent on IRFC's tax-free bonds look attractive.

Thumbs down for NBFCs

The fixed deposit market is seeing a shift towards manufacturing companies after a number of top-rated NBFCs slashed their deposit rates to less than 15 per cent. According to market sources, sub-brokers are aggressively pushing FD programmes of manufacturing companies as the spreads there are much better. Typically, a manufacturing company offers 15 per cent plus an incentive of 1.5-2 per cent, which gives an attractive yield of over 17.5 per cent.

Pvt placements galore

The private placement market is attracting a host of institutions and corporates keen to tap the surplus cash with banks. Apart from IDBI and IRFC's taxable bonds, the other players include GE Capital, Nestle, Grasim, IPCL, Power Finance Corporation, Orient Paper, Kerala State Finance Corporation, etc. While Nestle is offering a coupon of 14.5 per cent for its AAA-rated five-year paper, the A V Birla flagship Grasim Industries has priced its paper 50 basis points above Nestle.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.