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Fundraising via bonds on private placement basis climbs 28% to Rs 4.42 lakh cr in Apr-Oct

Companies garnered Rs 4.42 lakh crore through issuance of bonds on private placement basis in the first seven months of the ongoing fiscal, a surge of 28 per cent from the year-ago period, due to low interest rates. The funds were mopped up to strengthen balance sheets, retire existing debt and support working capital requirements, market experts said.

According to data available with markets regulator Sebi, companies listed on BSE and NSE garnered total Rs 4.42 lakh crore during April-October 2020-21.

In comparison, listed firms raised Rs 3.45 lakh crore in the first seven months of 2019-20. The appetite of institutional investors towards investing in bonds of listed companies via private placement issuances has increased in this fiscal year, especially in the last five months.

“Government schemes including production linked interest scheme in promoting companies to raise capital through private placement for bonds is a preferred method as the interest rates are low,” said Divam Sharma, co-founder of Green Portfolio.

“The low interest cost through bond issuances, reluctance of banks and NBFCs to issue high ticket loans to listed companies are inducing them to raise capital through private placement of bonds,” he added.

In addition, there is an increasing appetite from investors and mutual funds to participate in such issuances as the fund inflows in debt mutual funds have risen. More capital is chasing additional returns, as the interests on other fixed income securities have fallen, Sharma noted.

According to him, many companies in sectors including pharma, chemicals, automobile, electronics and textile are seeking to enhance their capacities as they are seeing uptick in results in the previous quarter. In terms of numbers, 1,157 issuances took place in the period under review as compared to 1,069 in the year-ago period.

In private placements, firms issue securities or bonds to institutional investors.

Overall, listed companies raised Rs 6.75 lakh crore through issuance of bonds on private placement basis in 2019-20.
Going ahead, Sharma said the outlook of raising capital through this route looks robust as the interest rates remain low, companies increasingly launch capex plans, and there is huge appetite from institutional capital to participate in such private placements.

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Asian shares, US futures gain after last Trump-Biden debate

Shares were mostly higher in Asia on Friday after President Donald Trump and his challenger former Vice President Joe Biden faced off in their second and final debate before the November 3 election. Stocks rose in Tokyo, Hong Kong and Shanghai but declined in Sydney.

In their debate late Thursday, U.S. time, Trump and his Democratic challenger Biden largely avoided the disorganized rancor of their first face-off in a more substantive exchange highlighting their vastly different approaches to many challenges facing the nation.

least, it gave markets no fresh reason for alarm. ”The final U.S. presidential debate was less chaotic than the first but offered little new information to inform the result for markets,” Stephen Innes of Axi said in a commentary. Meanwhile, discussion relevant to the post-election economic outlook was limited, particularly from President Trump.” U.S. stock futures shifted from modest losses to tiny gains in the debate’s aftermath. Asian shares also trended higher.

Japan’s Nikkei 225 picked up 0.4% to 23,558.29 and the Hang Seng in Hong Kong jumped 0.7% to 24,956.47. In Seoul, the Kospi climbed 0.5% to 2,366.52 while the Shanghai Composite index edged 0.1% higher to 3,316.87.
India’s Sensex opened 0.4% higher to 40,728.39 and shares rose in Southeast Asia.

In Australia, the S&P/ASX 200 gave up 0.1% to 6,166.90. Overnight, stocks shook off a wobbly start and ended higher, with the S&P 500 up 0.5%. Several earnings reports from big U.S. companies came in better than analysts had expected, which helped put investors in a buying mood. Also, House Speaker Nancy Pelosi said progress was being made on talks to deliver more stimulus to the U.S. economy.

Markets have been gyrating for weeks as investors gauge the chances of Washington reaching a deal on more support for the economy. Time is running out to get something done before the election, which has dimmed some of the optimism that Democrats and Republicans will soon strike a bargain on an aid package.

The S&P 500 rose 17.93 points to 3,453.49. The Dow Jones Industrial Average gained 0.5% to 28,363.66. The Nasdaq composite added 0.2% to 11,506.01. Smaller company stocks fared better than the rest of the market. The Russell 2000 small-cap index climbed 26.48 points, or 1.7%, to 1,630.25.

Pelosi and Treasury Secretary Steven Mnuchin have been negotiating daily this week on a possible aid package. On Thursday, Pelosi said that progress is still being made.

”Help is on the way. It will be bigger, it will be better, it will be safer and it will be retroactive,” she said. A piece of such a deal could include extra benefits for workers who lost their jobs due to the coronavirus pandemic. A report on Thursday morning showed that 787,000 workers applied for unemployment benefits last week. While that’s still an incredibly high number relative to history, it’s down from 842,000 the prior week. It also was not nearly as bad as economists were expecting.

Another report showed that sales of previously occupied homes accelerated even more last month than economists expected. Low mortgage rates are driving the action, as is a surge in interest in homes in Lake Tahoe and other resort areas as people look to work from home in more attractive locales, according to the National Association of Realtors.

Big companies, meanwhile, continue to report profits for the summer that took a hit from the coronavirus-caused recession. But they’re mostly not as bad as feared. Align Technology, which makes Invisalign teeth straighteners, surged 35% for the biggest gain in the S&P 500 after its earnings report blew past Wall Street’s expectations. Stronger sales to teenagers helped the company more than triple analysts’ expectations for earnings per share.

AT&T strengthened by 5.8% after it reported revenue for the latest quarter that beat analysts’ expectations. Coca-Cola gained 1.4%, and Tesla rose 0.7% after both reported earnings that topped Wall Street’s forecasts.
The yield on the 10-year Treasury was steady at 0.85% from 0.86% late Thursday. It’s still close to its highest level since June.

U.S. crude oil gained 5 cents to $40.69 per barrel in electronic trading on the New York Mercantile Exchange. It added 61 cents to $40.64 per barrel on Thursday. Brent crude, the international standard, added 6 cents to $42.52 per barrel.

The U.S. dollar bought 104.71 Japanese yen, down from 104.86 yen late Thursday. The euro slipped to $1.1801 from $1.1820.

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Vedanta shareholders eye bonanza, board to consider interim dividend after failed delisting

Anil Agarwal-led Vedanta Ltd today informed the bourses that the company’s board will meet later this week to consider and approve the first interim dividend on equity shares for the current fiscal year. The move comes days after its subsidiary Hindustan Zinc announced an interim dividend of Rs 21.30 per equity share. According to the latest shareholding data available on the Bombay Stock Exchange’s website, Vedanta holds 274 crore shares of the Hindustan Zinc, translating to an interim dividend of Rs 5,842.9 crore. According to analysts, Vedanta could also distribute the dividend it received from Hindustan Zinc in May this year.

With the business environment improving, expectations of a higher dividend payout can not be ruled out. “As per the policy Vedanta Ltd was supposed to distribute the previous dividend as well, but due to a volatile environment they did not. Performance of the company has now improved and the macro-environment is also better, helped by the Chinese demand going up,” Abhimanyu Sofat, Vice President-Research, IIFL told Financial Express Online.

Taking into consideration the recent dividend from Hindustan Zinc, Vedanta could have a total of over Rs 10,000 crore to be distributed among shareholders. “It seems that right now nothing will happen on the delisting front, so the possibility of the dividend payout being significantly high is there,” Sofat added.

Vedanta’s board will meet on October 24 to consider the dividend and the record date for the same has been set as October 31. “I think the street is factoring in a higher payout. Dividend was on hold because of the delisting issue with that on hold now it could work out to be somewhere in the range of Rs 20-25 per share,” said Aniruddha Sarkar, Chief Investment Officer & Portfolio Manager, Quest Investment Advisors. He further believes that a higher dividend could also help Vedanta calm down the agitated investors who were visibly upset with the delisting offer. “This (dividend) could act as a sweetener that may help Vedanta come with a revised delisting offer after 6 months or more,” he added.

A higher dividend payout would also help the promoter entity, Vedanta Resources. Rating agency S&P Global earlier this week said that the failed delisting of Vedanta Ltd raises risks over Vedanta Resources’ ability to sustainably service its debt beyond the next 12 months. “Vedanta Resources faces debt maturities of about US$1.8 billion over the next year. These include a US$414 million loan due in December and a US$670 million bond due in June 2021,” S&P Global said.

Earlier this month, Vedanta’s delisting failed as public shareholders did not tender the required 134 crore shares that were needed for the firm to go off the stock exchanges. Vedanta has set the floor price for the delisting of shares at Rs 87.25 per share but majority of the stocks tendered during the delisting process by public shareholders were in the range of Rs 140-150 per share.

Analysts have been claiming that the correction in Vedanta’s stock price post the failed delisting has made the stock an attractive bet. “I find Vedanta, except for the issues with promoters, is a good business with good assets. As a stock it could be interesting to hold as upside could be significant post the correction,” said Abhimanyu Sofat. On the other hand Aniruddha Sarkar said that the management continues to remain an overhang for him for which he would avoid the stock.

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RIL share price jumps over 1.5% on Reliance Jio-Qualcomm 5G tie-up

RIL share price gained 1.64 per cent to Rs 2,191 apiece on BSE, after the company informed that Reliance Jio has locally developed an open and interoperable interface compliant architecture-based 5G solution in collaboration with Qualcomm Technologies. With today’s gain, Reliance Industries Ltd stock price is up 152 per cent from its 52-week low of Rs 868 touched in March this year. “Qualcomm Technologies, Inc. and Jio Platforms along with its wholly-owned subsidiary Radisys Corporation announced their expanded efforts to develop open and interoperable interface compliant architecture based 5G solutions with a virtualized RAN,” it said in a press release.

Qualcomm Technologies and Jio also announced that they achieved over a 1 Gbps milestone on the Jio 5GNR solution, leveraging the Qualcomm 5G RAN Platforms. Last week, research and brokerage firm Motilal Oswal Financial Services said that the US, South Korea and China are leading the 5G race. China is aggressively ramping up its 5G network and has a target of adding 600k sites by CY20 (by its top-3 operators). This could be the key trigger for global 5G acceptance over the next couple of years.

Reliance Industries said that this 1 Gbps milestone not only supports Jio’s 5G credentials but also signifies the entry of Jio and India into the Gigabit 5G NR product portfolio. With 5G technology, users will experience the benefits of higher data rates, low latency communications and enhanced digital experiences across a wide array of connected devices, from 5G-enabled smartphones to enterprise laptops to AR/VR products to vertical IOT solutions.

Reliance Jio has created an eco-system comprising of network, devices, applications and content, platforms, service experience and affordable tariffs for everyone to live the Jio Digital Life. As part of its customer offers, Jio has revolutionised the Indian telecom landscape by making voice calls for Jio customers absolutely free.

At 10.10 AM, RIL shares were trading 0.70 per cent higher at Rs 2,170.60 apiece, as compared to a 0.96 per cent rise in S&P BSE Sensex.

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