News Detail

Buyers of corporate bonds appear to be putting their money in shorter-term three-year securities, given the coupon rates are more attractive than those for longer-term bonds. Power Finance Corporation (PFC), for instance, raised INR 2,350 crore on Thursday through private placement of non-convertible debentures (NCDs), of which INR 1,650 crore was raised in the three-year category at 9.11 Percent, market players said.

The lender raised just INR 100 crore at 9.15 Percent  in the five-year category and R600 crore at 9.2 Percent for a tenure of seven years.

“Three-year bonds are more liquid, but long-term investors, such as life insurance companies, find the seven-year paper more attractive,” said Ajay Manglunia, senior vice-president and head of fixed income at Edelweiss Securities.

“Given the flatness of the yield curve, it makes a very attractive investment over the next 8-12 quarters,” said Lakshmi Iyer, chief investment officer at Kotak Mahindra Asset Management Company.

Investors are also buying shorter-term non-convertible debentures. Shriram Transport Finance Company's public issue of NCDs was fully subscribed on the first day and raised INR 1,570 crore. Umesh Revankar, managing director of the firm that finances vehicle purchases, said at least 70 Percent of the issue was subscribed in the three-year category.

“Even in public issues, the three- and five-year categories are popular as retail investors are looking for the best-possible yield in the shortest period of time,” he added. Shriram Transport’s issue offers a yield of 11 Percent  for three years and 11.25 Percent on the five-year bond.

Source-On Request