Friday, November 30, 2012

[aaykarbhavan] Business standard news updates 1-12-2012



FII limit in domestic debt raised by $ 10 bn


BS REPORTER

New Delhi, 30 November

To attract long- term investments into the debt market and to narrow the current account deficit, the finance ministry today raised the foreign institutional investor ( FII) limits in government securities and corporate bonds by $ 5 billion ( 27,600 crore) each.

The additional $ 10 billion would raise the total FII investment limit allowed in a year in domestic debt to $ 75 billion ( 4.14 lakh crore).

The high- level committee on external commercial borrowing, headed by economic affairs secretary Arvind Mayaram, took the decision, to encourage long- term foreign funds into the Indian debt market.

According to ministry officials, the $ 5- billion window in government securities would be without any stipulated residual maturity. It would be open to pension funds, central banks and sovereign wealth funds. The other $ 5- billion segment would be open for corporate bonds.

This overall limit of $ 75 billion in domestic debt is distributed through a host of categories across government, corporate and infrastructure debt. The guidelines in this regard would be notified in a week to 10 days by the Reserve Bank of India.

Move to attract long- term investments into the debt market

IPO market set to buzz in December


SAMIE MODAK

Mumbai, 30 November

The primary market for equities is promising to end with a bang in an otherwise dull 2012.

Four companies, including Bharti Infratel and CARE Ratings, are set to raise close to 5,700 crore through initial public offerings ( IPOs) over the next couple of weeks, as issuers seek to cash in on the cheerful investor sentiment in the stock markets.

The 4,500- crore IPO of Bharti, which will open on December 11, would be the largest issue since Coal India's 15,000- crore share sale in October 2010. The amount proposed to be raised by Bharti, which has priced its issue in the range of 210- 240 apiece, is almost four times the money raised through IPOs in 2012.

CARE Ratings and PC Jeweller, also planning IPOs in the next couple of weeks, aim to raise 1,000 crore.

Bankers to the issues, however, are a tad worried if the market has the appetite to absorb these issues, especially as Rural Electrification Corporation ( REC) and NMDC are also aiming to raise almost 11,000 crore in the same period. Seven IPOs ( barring issues by small and medium enterprises) have raised 1,500 crore in 2012. To add to this, REC would launch a 4,500- crore tax- free bond issue during the first week of December, and state- owned NMDC is planning a 6,500- crore offer for sale in the second week of December. The flurry of primary market activity has raised some doubts as to all the six issues sailing through comfortably.

"At this late stage in the year, getting deals over the line can prove to be tricky," said Tarun Kataria, chief executive officer, Religare Capital Markets.

"FIIs ( foreign institutional investors) tend to wind down and DIIs ( domestic institutional investors) have little new AUMs ( assets under management). In an environment like this, valuations need to be compelling." What is making issuers and bankers confident of pushing through the issues is that foreign institutional inflows have not slowed. " Given that FIIs have invested over $ 19 billion into the market this year, absorbing $ 1 billion won't be difficult.

All IPOs this year have made money for investors," said V Jayasankar, head of equity capital markets, Kotak Investment Banking, a banker to Bharti's IPO.

Echoing Jayasankar, S Subramaniam, managing director of Axis Capital, another banker to the Bharti issue, said, " There have been years in the mid- 90s when the market has seen new issuances of 10 per cent of market capitalisation, that too without much participation by FIIs." Brokers said FIIs and local investors are unlikely to shun the issues just because it is the year- end. " There is appetite to absorb all these issues, but the key is pricing and quality," said Nirmal Jain, chairman, IIFL.

Bharti Infratel's 4,500- crore share sale to be the largest since Coal India's in 2010 GOING PUBLIC

Four issues will hit the market in the first two weeks of December

Approx Launch issue size Issue date ( cr) price ()

Bharti Infratel Dec 11 4,534 210- 240 CARE Ratings Dec 07 540 700- 750 PC Jeweller Dec 10 585 130 Veto Switchgears Dec 03 25 48- 50

Source: Banks and companies 5,684 crore

Approximate issue size

MARKETS, P6

>Bharti Infratel IPO opens on Dec 10 > Nuclear Power Corp to be listed

 



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CS A  RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
mobile 093810 11200

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