After PFC, EXIM Bank Scraps 10-Year Bond Issue Due To Higher-Than-Expected Rates
For the 10-year bond issue, EXIM Bank received 84 bids worth Rs 5,236.97 crore in the range of 6.75–7%.
After Power Finance Corp. scrapped its zero coupon bond issue last week, another issuer Export Import Bank of India withdrew its plan to issue 10-year bonds due to higher coupon rate, three merchant bankers told NDTV Profit on Wednesday.
The state-owned entity scrapped its plans to raise up to Rs 2,500 crore through the issue of 10-year bonds as it did not receive the desired pricing, the merchant bankers said on the condition of anonymity.
The company was expecting the bond to be issued at a tighter pricing of around 6.8%, according to the merchant bankers who are aware of the matter. However, it was only able to raise the whole amount at 6.88%, four basis points lower than NTPC, which raised a higher amount of Rs 4,000 crore through the same paper.
For the 10-year bond issue, EXIM Bank received 84 bids worth Rs 5,236.97 crore in the range of 6.75–7%, according to the bid book accessed by NDTV Profit.
This has come as long-term bonds have become slightly unattractive for issuers at a time when three- and five-year bond yields have flattened after being inverted for an elongated period of time. This was because yields fell across the segments on the hope of further rate cuts and ample liquidity in the banking system.
In March, the company raised Rs 2,350 crore through the June 2030 bond at a coupon of 7.12%. While there is still demand from investors for long-term bonds, especially 10-year, the appetite for short to medium tenures is higher.
Last week, PFC scrapped two bond issuances worth Rs 6,000 crore as there was limited interest from investors to bid for tight pricing. Currently, the yield on three-year bonds issued by the National Bank for Agriculture and Rural Development — considered a benchmark in the corporate bond market — was at 6.93%, while those on five- and 10-year bonds were at 6.92% and 6.98% respectively.
Typically, yields on corporate bonds mirror those of sovereign government securities. In April, yield on the 10-year benchmark Indian government bond touched over a three-year low at 6.29%.
