Retail buyers surprise bond markets
Mumbai: The bond market is seeing surprising responses from retail investors as to the width of the marketing window and uncertain rate trajectory. While a top-rated company failed to elicit adequate response from them, a lower-rated issuance earned overwhelming approval.
Top-rated Dewan Housing Finance, known for its foot on the street, raised about Rs 11,000 crore against the targeted Rs 12,000 crore in the latest bond sale. It obtained whopping response from institutional investors, who wanted to buy those securities more than two and half times beyond the maximum size pegged at Rs 3,000 crore.
But, retail investors cold shouldered the issue. They only subscribed about one-fifth of the whole retail size of Rs 4,200 crore. DHFL had set records in raising retail money in 2016. Similarly, the lowerrated JM Financial Credit Solutions saw overwhelming response on the very first day of subscription in its maiden bond sale this week. “We had just a two-day window to market it among retail investors across the nook and corner of the country,” said Ajay Manglunia, executive vice president (fixed income) at Edelweiss Finance, which was one of the arrangers of both the bond issues.
“While the larger magnitude of the bond sale required extended efforts, retail investors too chose to pause as there would be more occasions for retail subscriptions in the coming days amid higher rate expectations.”
For JM, the total issue size was Rs 750 crore, of which Rs 225 crore was earmarked for retail investors who can invest up to Rs 10 lakh per person. The retail segment received about three and a half times higher subscription that was discarded. However, JM issuance failed to attract institutional investors to the fullest capacity.
Markets are agog with speculations that the Reserve Bank of India may soon raise the policy rates as rising crude oil prices escalate domestic retail prices.
Bank deposit growth was muted with the gauge hitting a five-decade low in FY18. It grew just 6.7 per cent in the last financial year. This has made them unattractive and retail investors are scouting for higher rates in bonds or other debt instruments.
“Retail investor mood is swinging amid wide speculations over future rate trajectory,” said Anil Chopra, group director - corporate affairs, Bajaj Capital. “It now takes time to convince retail investors for bond investments.”
Top-rated Dewan Housing Finance, known for its foot on the street, raised about Rs 11,000 crore against the targeted Rs 12,000 crore in the latest bond sale. It obtained whopping response from institutional investors, who wanted to buy those securities more than two and half times beyond the maximum size pegged at Rs 3,000 crore.
But, retail investors cold shouldered the issue. They only subscribed about one-fifth of the whole retail size of Rs 4,200 crore. DHFL had set records in raising retail money in 2016. Similarly, the lowerrated JM Financial Credit Solutions saw overwhelming response on the very first day of subscription in its maiden bond sale this week. “We had just a two-day window to market it among retail investors across the nook and corner of the country,” said Ajay Manglunia, executive vice president (fixed income) at Edelweiss Finance, which was one of the arrangers of both the bond issues.
“While the larger magnitude of the bond sale required extended efforts, retail investors too chose to pause as there would be more occasions for retail subscriptions in the coming days amid higher rate expectations.”
For JM, the total issue size was Rs 750 crore, of which Rs 225 crore was earmarked for retail investors who can invest up to Rs 10 lakh per person. The retail segment received about three and a half times higher subscription that was discarded. However, JM issuance failed to attract institutional investors to the fullest capacity.
Markets are agog with speculations that the Reserve Bank of India may soon raise the policy rates as rising crude oil prices escalate domestic retail prices.
Bank deposit growth was muted with the gauge hitting a five-decade low in FY18. It grew just 6.7 per cent in the last financial year. This has made them unattractive and retail investors are scouting for higher rates in bonds or other debt instruments.
“Retail investor mood is swinging amid wide speculations over future rate trajectory,” said Anil Chopra, group director - corporate affairs, Bajaj Capital. “It now takes time to convince retail investors for bond investments.”