Comments
Kerala Financial Corporation (KFC) has raised ₹250 crore from the debt market by issuing non-SLR bonds of ₹100 crore with a green shoe option of ₹150 crore on private placement basis.
The bonds have been rated AA(SO) by RBI- and SEBI-approved rating agencies with stable outlook on investment, said Sanjeev Kaushik, Chairman and Managing Director of the Corporation.
The bonds have a tenure of seven years and will bear coupon rate of 8.99 per cent per annum payable semi-annually and will be redeemable from the fourth year.
“This is the only State public sector undertaking raising funds without a government guarantee,” Kaushik said.
Turbulent bond market
The NBFC bond market has been turbulent since October 2018 post IL&FS crisis and liquidity is tight for bonds with credit rating lower than AAA.
After the downgrading of several NBFCs/HFCs, the market has not been favourable even for papers with AAA rating. Hence, investors and market participants are extra cautious and extremely selective when investing in the bond market.
Most similar-rated issues were bid much above a coupon rate of 9 per cent and hence, it is no mean achievement to get the funds below 9 per cent, Kaushik said. The Corporation has been issuing bonds since 2011, and this is the sixth successful launch, which underlines the confidence and trust of investors in its credit quality. It has so far raised ₹1,350 crore from the bond market and ₹250 crore has been redeemed.
Strong balance sheet
Initially, the Corporation raised bonds with State government guarantee where it had to pay guarantee commission at the rate of 0.75 per cent plus GST, thereby increasing the cost further by 1 per cent.
Since 2016, funds have been raised without a government guarantee, based solely on the strength of the balance sheet and the credit enhancement structure underlying the issue.
Premnath Ravindranath, Executive Director, who heads the Treasury Department of KFC, said that it aims to build the loan portfolio to a level of ₹3,500 crore by the end of 2019-20 from the present level of ₹2,700 crore.
With this in view, the Corporation plans to go for another bond issue by the end of this fiscal provided market conditions are favourable, he added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.