Both companies likely sold commercial papers (CPs) that offered 5.99% and 5.92%, respectively, with about 90-day maturities.
The rates, according to market dealers, are in line with the existing rate trajectory.
“When we invested in Jio two-three months ago those CPs with similar maturities earned 5.60-5.70%,” said a fund manager who subscribed to CPs this time as well.
Since then, Treasury Bill, shorter duration sovereign papers, yielded higher, too, following the Reserve
’s policy rate rise reflecting an overall northward trend.
did not immediately respond to ET’s query.
Commercial papers are shorter-duration debt securities sold by companies with maturities up to 12 months generally. While Retail Ventures likely sold CP worth Rs 5,500 crore, Jio issued CPs for Rs 3,000 crore, people cited above said.
More than one-fourth of the Retail Venture CPs will mature in three months. The rest will come up for redemption in more than two months, they said.
Both companies are triple-A rated and their CPs are marked as A1+, billed as top grade in the CP market. Mutual funds have mostly subscribed to those securities.
“Both are top credit, triggering good demand from money market funds,” said Ajay Manglunia, managing director and head of debt capital market at
. “CP rates are relatively lower than bank short-term lending rates, making it an attractive proposition for corporate borrowers.”
of India’s three-month MCLR (marginal costs of funds-based lending rates), a rate gauge, charges 7.35%. The 91-day Treasury Bill, another external matrix on which banks add a mark-up to price a short-term loan, yields 5.63% in the primary market, shows the latest available data from the Reserve Bank of India.
companies have been funding their working capital requirement from the CP market where the rates are generally more competitive than bank lending rates,” said Mahendra Jajoo, CIO – debt at Mirae Asset Management. “Due to the strong presence of the mutual funds this form of money market raising has become economical for corporate borrowers.”
Reliance Jio is estimated to spend $9.1 billion, excluding spectrum costs, primarily on 5G capex through FY23-25 and is expected to corner more market share, chasing top-end customers from cash-strapped
(Vi), ET reported on August 31 citing analysts.
Reliance Retail Ventures, a subsidiary of
, is the holding company of Reliance which operates the group’s retail business.
As on March 31, 2022, Reliance Retail operates 15,196 stores across more than 7,000 cities with a retail area of over 41.6 million sq ft.