Skip to main content

3 bonds & 1 IPO target Rs 9,986 cr retail funds

SBI, IDFC, L&T arm and CIL will tap the market this week

 
THREE retail bond issues and one mega IPO will compete with each other to attract investors this week by offering them Rs 9,986 crore worth of investment options.

The initial public offering (IPO) of Coal India will vie for funds with bond issues from SBI, IDFC and L&T Infrastructure Finance.

Through retail bonds, SBI aims to raise Rs 1,000 crore, while IDFC is targeting Rs 3,400 crore and L&T Infrastructure Rs 700 crore.

The retail component of Coal India IPO will be about Rs 4,886 crore.

SBI promises an interest rate of 9.25-9.5 per cent on a 10-year bond and an additional interest of 0.5 per cent if investors continue for another five years.

"We believe there will be large retail investor appetite for the bond issue as we are offering a very attractive interest rate of 9.5 per cent for 10 years. In fact, we hope to increase the frequency of such retail bond issues every quarter so that the bank is able to have long-term funds," OP Bhatt, chairman and managing director of State Bank of India (SBI), told reporters at a

press conference while launching the retail bond issue.

The SBI bond will yield 200 basis points more than the 10-year fixed deposit of the bank.

Prithvi Haldea, chairman and managing director of Prime Database, said retail investors had put money in savings accounts and fixed deposits, and were waiting for an opportunity for better returns.

"Reliance Power, which has no projects on stream and no revenues to show, managed to attract 46 lakh retail investors who put in Rs 39,900 crore into the IPO. The retail portion was oversubscribed 14 times. If an issue is well planned with the right pricing, it will have ample takers," he said.

While the infrastructure bonds issued by IDFC and L&T are tax free, SBI bonds are taxable. IDFC bonds offer an interest rate of 7.5-8 per cent a year for 10 years, while L&T bonds offer 7.5-7.75 per cent.

The IDFC bond issue, which opened for subscription on September

30, is generating investor interest from nearly 32 cities.

"We extended the bond subscription period by another five days as the Sebi clearance for the issue in non-demat form came only this week. After this, we are seeing a lot of interest in smaller cities like Indore, Baroda, Surat and Coimbatore," said a senior IDFC official.

manjuab@mydigitalfc.com COAL India's Rs 15,000 crore mega issue, which opens for public subscription on Monday, has garnered a bullish endorsement from most market experts who believe it would be the star attraction of the week for all, including retail investors.

"This week the main attraction for retail investors will be the primary market with the mega IPO of Coal India slated to open on Monday," said Saurabh Jain, research head (retail) at Delhi-based SMC Global Securities.

CIL's IPO, priced in the range of Rs 225 to Rs 245 a share, is the biggest issue in India's history so far. The offering closes on October 21. For qualified institutional buyers, which include FIIs, insurance firms and mutual funds, the IPO will close on October 20.

Analysts said the issue will be important not only for the primary markets but also to secondary market participants, who will be watching it closely. In fact, such was the momentum to stock up cash for the CIL issue that in just two sessions BSE benchmark Sensex sank a whopping 500 points.

Besides, there will be some short-term pressure in the money market, as experts believe there could be a total liquidity impact of roughly about Rs 150,000 crore during this IPO.

"The liquidity tightness during a large IPO occurs as a result of the fact that many bids are financed through borrowing. This leverage shows up as a temporary expansion in the credit during the IPO period," Axis Mutual Fund said.

Brokerage house CLSA said, "CIL deserves to trade at a premium to global coal peers given much lower volatility of earnings and large headroom to raise prices in a supply deficit environment."

CIL is one of the largest companies in the world based on the coal reserves of 64,786 million tonnes.

 


Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...

UTI Equity Fund Invest Online

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   UTI Equity Fund   Invest Online UTI Equity is a large cap-oriented fund with assets under management worth Rs. 2,269 crore (as on June 30, 2013). The fund was originally launched in May 1992 as UTI Mastergain and is benchmarked against S&P BSE 100. A couple of years back the name of the fund was changed to UTI Equity Fund and many of the smaller funds of UTI were merged into this fund. Performance The fund has outperformed its benchmark as well as the equity diversified category average in the last one-, three- and five-year periods. It has repeated the same in 2013 (as on May 31). Since its inception the fund has delivered an impressive 26 per cent compounded annual growth rate which is superior to its benchmark performance in the same period. Y...

Good time to invest in Infrastructure Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now