L&T Finance bond sale oversubscribed on day one

BondsMUMBAI: Retail investors snapped up top rated non-banking finance company L&T Finance’s public bond sales on Wednesday that were oversubscribed 3.6 times marking an end of investor apathy for para bank debt papers in the wake of the liquidity tightening after the IL&FS loan default.

The company obtained Rs 1,802 crore worth of subscriptions on day one compared with Rs 500 crore pegged as base size. It aimed to raise Rs 1,500 crore including the oversubscription option.

The company is likely to close the bond sale on Thursday as it will only retain the targeted sum of Rs 1,500 crore, market sources said. It will soon bring another tranche in April or May considering the success of the first tranche. The company has room to mop up another Rs 3,500 crore in the second issuance.

Retail and wealthy investors led the company’s successful issuance as both segments saw 1.4-2.17x higher subscriptions than the allotted size.

“A set of individual investors showed higher appetite to buy those high yielding NBFC sector bonds as interest rates are heading lower in coming quarters,” said Ajay Manglunia, executive vice president, Edelweiss Financial.

Corporates only invested Rs 39 crore against Rs 300 crore earmarked for them. Institutions too subscribed half of the sum meant for them.

The triple-A rated bonds offered as much as 9.35% with 10-year maturity for retail investors. Rates offered for three and five-year maturities are in the range of 9.10-9.25%.