News: India Inc raises Rs 79,446 cr via bonds

(BL 13/06/2006) New Delhi - India Inc's fund mobilisation through bonds shot up by 43 per cent to Rs 79,446 crore in 2005-06 as banks and financial institutions borrowed heavily to meet strong demand for credit in the economy.

The fund mobilisation of Rs 79,446 crore through private placement of corporate bonds was a record in 2005-06 as full 2001-02, 2002-03, 2003-04 and 2004-05 had witnessed raising of Rs 45,427 crore; Rs 48,424 crore; Rs 48,428 crore and Rs 55,409 crore respectively, according to Prithvi Haldea of PRIME database.

Only such deals, which have a tenor and put/call option of more than 1 year, are reflected in this database.

The major reason for this substantial increase was due to 80 per cent increase in mobilisation at 59,290 crore by the financial institutions and banks, compared to Rs 32,935 crore in the previous year.

The other sector, which witnessed growth was PSUs, whose mobilisation went up by 66 per cent from Rs 6,441 crore to Rs 10,719 crore.

On the other hand, a major fall in mobilisation came from state level undertakings, down by 75 per cent to Rs 889 crore compared to Rs 3,544 crore in the previous year.

State financial institutions also recorded a fall, down from Rs 2,381 crore to Rs 718 crore.

Significantly, a fall in mobilisation, according to Haldea, also came from the private sector, down by 23 per cent to Rs 7,829 crore compared to Rs 10,108 crore in the previous year.