REC raises Rs 1,700 crore via 5-year bonds at 9.02%

MUMBAI: Rural Electrification Corporation has raised Rs 1,700 crore by selling bonds at lower than estimated yield of 9.02%. This signals the market appetite for bonds from good companies as this is the first triple A-rated PSU bond issue this fiscal.

The bond has a tenor of five years, unlike its usual long-term fund raising which was done mostly through 10-year bonds, said a person familiar with the matter. Before the sale was done, it was expected to be sold at 9.07% yield. Bond prices and yields move in opposite direction.

“REC issue commands premium among investors,’’ said a banker who did not want to be identified. “As the issue was of below 10-year maturity, many mutual funds, banks and private insurance companies have invested in it.”

Bond issuances in India have slowed this fiscal with the prolific issuers, such as non-banking finance companies, waiting for rule changes that forced them to set aside funds regularly to repay investors. Also, many are anticipating the rates to fall given that the RBI governor has indicated at cutting rates if consumer price rise eases in an accelerated way.