MUMBAI: Indian banks have raised $2 billion via infrastructure bonds during the last two weeks, expecting a revival in personal capital expenditure and higher govt spending, analysts mentioned.
Two personal lenders and one state-run financial institution have tapped the marketplace to boost finances the use of those bonds on this length. Last week, the country’s greatest lender State Bank of India raised $1.22 billion within the greatest such factor.
“There is a revival in demand for infrastructure funds as economic activity picks up,” mentioned Ajay Manglunia, managing director and head of funding grade staff at JM Financial. “Hence banks that are focused on this sector are raising huge sums of money which would be deployed,” Manglunia added.
Infrastructure bonds are issued to finance long-term construction tasks.
Other banks that raised an identical finances come with ICICI Bank, which concluded a seven-year bond factor this week, and Kotak Mahindra Bank.
Several personal lenders like Axis Bank and HDFC Bank also are making plans infrastructure bonds in coming weeks, mentioned service provider bankers, who spoke on situation of anonymity since their plans have not begun to be firmed.
Both the banks weren’t right away to be had for remark.
ICICI Bank and Bank of Baroda have already tapped the marketplace in August-September.
“Banks are trying to fund their credit growth, as economic activity is picking up, given the shape of their balance sheet and all this push for capex activity,” mentioned Pankaj Pathak, fund supervisor, mounted source of revenue at Quantum Mutual Fund.
“If credit growth continues to remain healthy, it will lead to more bond issuances,” Pathak added.
The financial system grew at 6.3% in July-September and is observed rising through 6.8% this monetary yr, with each personal intake and funding slowing amid emerging inflation.
Banks also are benefiting from a contemporary dip in Indian govt bond yield.
While, ICICI Bank and Kotak Mahindra Bank paid an annual coupon of seven.63% each and every for his or her seven-year bonds, SBI paid 7.51% on its 10-year infra bonds.
The benchmark 10-year bond used to be buying and selling at a semi-annual yield of seven.30%.
“If you look at the rates that banks are getting currently, it is very fine, so they are raising additional capital, which also allows them a cushion in times of tight liquidity,” mentioned Soumyajit Niyogi, director for core analytical staff at India Ratings. & Research.
Two personal lenders and one state-run financial institution have tapped the marketplace to boost finances the use of those bonds on this length. Last week, the country’s greatest lender State Bank of India raised $1.22 billion within the greatest such factor.
“There is a revival in demand for infrastructure funds as economic activity picks up,” mentioned Ajay Manglunia, managing director and head of funding grade staff at JM Financial. “Hence banks that are focused on this sector are raising huge sums of money which would be deployed,” Manglunia added.
Infrastructure bonds are issued to finance long-term construction tasks.
Other banks that raised an identical finances come with ICICI Bank, which concluded a seven-year bond factor this week, and Kotak Mahindra Bank.
Several personal lenders like Axis Bank and HDFC Bank also are making plans infrastructure bonds in coming weeks, mentioned service provider bankers, who spoke on situation of anonymity since their plans have not begun to be firmed.
Both the banks weren’t right away to be had for remark.
ICICI Bank and Bank of Baroda have already tapped the marketplace in August-September.
“Banks are trying to fund their credit growth, as economic activity is picking up, given the shape of their balance sheet and all this push for capex activity,” mentioned Pankaj Pathak, fund supervisor, mounted source of revenue at Quantum Mutual Fund.
“If credit growth continues to remain healthy, it will lead to more bond issuances,” Pathak added.
The financial system grew at 6.3% in July-September and is observed rising through 6.8% this monetary yr, with each personal intake and funding slowing amid emerging inflation.
Banks also are benefiting from a contemporary dip in Indian govt bond yield.
While, ICICI Bank and Kotak Mahindra Bank paid an annual coupon of seven.63% each and every for his or her seven-year bonds, SBI paid 7.51% on its 10-year infra bonds.
The benchmark 10-year bond used to be buying and selling at a semi-annual yield of seven.30%.
“If you look at the rates that banks are getting currently, it is very fine, so they are raising additional capital, which also allows them a cushion in times of tight liquidity,” mentioned Soumyajit Niyogi, director for core analytical staff at India Ratings. & Research.