KOLKATA: REC Ltd, formerly known as Rural Electrification Corp, raised about Rs 1,245 crore in bonds Friday at a much higher rate, reflecting tighter liquidity and lower investor appetite, bond traders said.
The REC sold its “AAA” rated bonds carrying 2-year 7-month maturity at 8.5%, which is 15-25 basis points higher than the prevailing rate for bonds with best credit ratings.
“The higher rate is due to a combination of tighter liquidity and high frequency of REC’s fund raising,” a trader said. REC has always been very active in the bond market for mobilising capital.
“Participation in the market remained low amid concerns over credit quality,” said Shailendra Jhingan, managing director of ICICI Securities Primary Dealership. “Liquidity is on the tighter side despite RBI’s action through OMO and forex swaps,” he said.
Short-term borrowing rates have inched up in general in the last few days on concerns over rating downgrades at Reliance Home Finance and Reliance Commercial Finance.
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However, the recent decline in oil prices is positive for the market. “The near-term outlook is now neutral to positive,” said Mahendra Kumar Jajoo, head of fixed income at Mirae Asset Global Investments (India).
