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Corporate bond sales increase 30% in January: Care Ratings
Feb-20-2019

Signaling an end to the liquidity crunch faced by non-banking finance companies (NBFCs) following the IL&FS bankruptcy since last September, Credit rating agency Care Ratings in its latest report has said corporate bond issuances by them have increased by 30 percent in the month of January 2019, reflecting renewed confidence among both issuers as well as investors. It noted that NBFCs are the biggest issuers of debt in the corporate bond market, controlling nearly 90 percent of the volume. It added that with the 30 percent spike in fresh issuances in January, their share has clawed backed to the near normal levels to 82.2 percent of the volume.

According to the report, NBFCs depend on the bond market to raise short -term capital for on-lending, and they go to banks for long-term finance. It also indicated that fresh corporate bond issuances by NBFCs saw a notable decline from 71.6 percent (of the total flow) in July 2018 to 64.6 percent in August 2018. It added that between September and November 2018, issuances rose each month rising to almost 80 percent in November 2018. But the liquidity challenges deepened in December as bond sales by NBFCs plunged almost 30 percent.

The rating agency said that the housing finance companies (HFCs) continue to lag and the share of fresh issuances by them plunged deeper from 10.1 percent in July 2018 to a trickle of 2.5 percent in December 2018. But, it noted that the share has almost doubled on a month-on-month basis from 2.5 percent in December 2018 to 5.2 percent in January 2019. In terms of funds raised through commercial papers, it pointed out that the share has seen a significant decline among NBFCs to the tune of 14.1 percent between July 2018 and January 2019 while that of HFCs declined 12.1 percent.


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