NEEPCO bond issue gets only a single bid

MUMBAI: Government-owned North Eastern Electric Power Corp’s (NEEPCO) proposed bond sale failed to materialise as jittery investors shied away from making any new primary market investments amid broader liquidity concerns. The central government enterprise planned to raise Rs 300 crore through the exchange-traded platform, known as electronic bidding platform in market parlance, said multiple people familiar with the matter.

“In this market, it is difficult to raise money even if you are a government owned company as investors prefer to sit on cash rather than take a new bet,” one of the persons cited above told ET.

NEEPCO received only one bid for Rs 13 crore with a 9.25 per cent yield (half-yearly). The company proposed seven-year money, with only call options after three years. A call option allows an issuer to extinguish the bonds before its scheduled maturity.


“The absence of a put option added to investor apathy,” said a market dealer. A put option permits investors to exit from an investment. NEEPCO later decided to withdraw the issue.

According to Lakshmi Iyer, CIO, debt & head-product, Kotak AMC, if the market scare extends this week, redemption pressures may increase.

“We are trying to maintain cash while cherry-picking stocks. Amid uncertainties, it is better to be inactive rather than active,” she had said last weekend.

Mutual funds are seen readying cash as they expect some redemptions before the quarter end.

“Investors have turned cautious,” said Kumaresh Ramakrishnan, head, fixed income, DHFL Pramerica Mutual Fund. “We are ensuring enough cash level as usual to tide over any pressure that may arise towards the quarterend. But investors are still buying select debt papers.”

Rating companies Crisil and ICRA have rated NEEPCO with AA grade.