By Dharamraj Dhutia
MUMBAI (Reuters) – India’s Jio Finance has postponed its plan to tap the corporate debt market to the next financial year starting April 1 due to elevated yields, two sources aware of the matter said on Friday.
The company, a wholly-owned unit of Jio Financial Services, had issued its maiden commercial paper (CP) last week, and had plans to issue its first bond before the end of March.
Jio Finance’s move comes days after Reuters reported that State Bank of India, the country’s biggest lender by assets, shelved its own plan to raise 150 billion rupees ($1.74 billion) through a sale of bonds this fiscal year.
Jio Finance had plans to raise around 30 billion rupees through five-year bonds, and had floated an offer for a coupon of 7.75%, according to the bankers.
“Investors were not willing to bid at anything below 7.90%, but the company is not comfortable with these levels, and since there is no urgent need of money, they have decided to approach the market after April monetary policy,” one source said.
The Reserve Bank of India’s monetary policy decision is due on April 9, and the central bank is widely expected to cut its key interest rate by 25 basis points.
“Rates will correct once the new financial year starts, with the RBI set to reduce repo rate one more time, and with major focus on liquidity infusion, we should see some decent correction in short-term yields,” the source said.
The sources requested anonymity as they are not authorised to speak to the media. Jio Finance did not immediately reply to a Reuters email for comment.
The non-banking financial company had raised 10 billion rupees through a three-month CP at a yield of 7.80%. Its bonds are rated ‘AAA’ and the CP is rated ‘A1+’ by Crisil and Care, both being the highest for the respective instruments.
Yields on corporate bonds rated ‘AAA’ are up by around 10 basis points since early February, despite the central bank’s rate cut and cash infusion amid high supply of debt including from states.
($1 = 86.2250 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Varun H K)
