What prompted foreign lenders to buy Piramal bonds?
HSBC, Standard Chartered and Credit Suisse, besides some domestic funds such as Reliance Mutual Fund, have bought debt papers of PEL, three people familiar with the matter told ET
By Saikat Das, ET Bureau |
Agencies
MUMBAI: Billionaire Ajay Pirmal-controlled Pirmal Enterprises (PEL), which has a substantial lending business, has raised about Rs 5,000 crore in bond sales in the past one month, allaying concerns of liquidity constraints in the non-banking finance industry.
HSBC, Standard Chartered and Credit Suisse, besides some domestic funds such as Reliance Mutual Fund, have bought debt papers of PEL, three people familiar with the matter told ET. Deutsche Bank is also in the process of subscribing to a new series of PEL bonds worth Rs 600-700 crore.
The individual banks and Reliance MF declined to comment on the matter, while a mail sent to Credit Suisse remained unanswered until the publication of this report.
“Over the past month, Piramal Enterprises has raised Rs 5,000 crore of longer-tenure corporate bonds,” PEL said in an e-mail response to ET’s queries. In addition, Piramal Capital and Housing Finance, a subsidiary company, has raised Rs 4,000 crore of term loans in the same period.
“In keeping with our previously stated intent of increasing the maturity profile of our shorter-term borrowings, this is further aimed at enhancing our liability management,” said the company, adding that banks and mutual funds are the investors.
These bonds are of two-to-six year maturities, offering rates in the range of 9.70-10.6%, said dealers, citing an increase in the company’s funding cost by about 20-25 basis points. ICRA has rated Piramal Enterprises bonds AA (Stable) grade.
We are pleased to have raised these funds at a competitive average interest rate of 9.5%, the company said.
The Piramal Group has reduced the share of commercial paper (CP) borrowings. CPs are short-term debt securities, usually with less than one-year maturities.
The bond proceeds will be used for refinancing and other general corporate needs. At the same time, the company aims to balance its assets and liabilities.
“The quantum of money raised in a short span of time and the diversity of institutional participation, despite a challenging market environment, further serves as a testament to the quality of our loan book and robust underwriting standards,” said Khushru Jijina, Managing Director, Piramal Capital & Housing Finance Ltd.
"PEL is backed by a strong brand name, which may have helped the company avail credit from top foreign banks,” said Ajay Manglunia, Executive Vice President at Edelweiss Financial Services. “All such bonds have been priced moderately, with the issuer seeing a marginal increase in the cost of funds."
HSBC, Standard Chartered and Credit Suisse, besides some domestic funds such as Reliance Mutual Fund, have bought debt papers of PEL, three people familiar with the matter told ET. Deutsche Bank is also in the process of subscribing to a new series of PEL bonds worth Rs 600-700 crore.
The individual banks and Reliance MF declined to comment on the matter, while a mail sent to Credit Suisse remained unanswered until the publication of this report.
“Over the past month, Piramal Enterprises has raised Rs 5,000 crore of longer-tenure corporate bonds,” PEL said in an e-mail response to ET’s queries. In addition, Piramal Capital and Housing Finance, a subsidiary company, has raised Rs 4,000 crore of term loans in the same period.
“In keeping with our previously stated intent of increasing the maturity profile of our shorter-term borrowings, this is further aimed at enhancing our liability management,” said the company, adding that banks and mutual funds are the investors.
These bonds are of two-to-six year maturities, offering rates in the range of 9.70-10.6%, said dealers, citing an increase in the company’s funding cost by about 20-25 basis points. ICRA has rated Piramal Enterprises bonds AA (Stable) grade.
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We are pleased to have raised these funds at a competitive average interest rate of 9.5%, the company said.
The Piramal Group has reduced the share of commercial paper (CP) borrowings. CPs are short-term debt securities, usually with less than one-year maturities.
The bond proceeds will be used for refinancing and other general corporate needs. At the same time, the company aims to balance its assets and liabilities.
“The quantum of money raised in a short span of time and the diversity of institutional participation, despite a challenging market environment, further serves as a testament to the quality of our loan book and robust underwriting standards,” said Khushru Jijina, Managing Director, Piramal Capital & Housing Finance Ltd.
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The liquidity profile of PEL remains supported from listed investments in Shriram group, unutilised bank lines and a strong promoter group with the stated intention to infuse equity, if required, according to ICRA."PEL is backed by a strong brand name, which may have helped the company avail credit from top foreign banks,” said Ajay Manglunia, Executive Vice President at Edelweiss Financial Services. “All such bonds have been priced moderately, with the issuer seeing a marginal increase in the cost of funds."
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