15% rise in debt pvt placement

MUMBAI, Dec 1: Even though the number of public issues by companies has fallen steeply in the last one year, the primary debt market has ...

MUMBAI, Dec 1: Even though the number of public issues by companies has fallen steeply in the last one year, the primary debt market has witnessed a 15 per cent rise in mobilisation through the debt private placement route during the first six months of 1998-99 over the corresponding period of the last year.

The first six months of current fiscal were dominated by a booming activity in private placement of debt with 88 institutions and corporates mobilising Rs 18,727 crore, according to a Prime Database. “One reason for the jump in fund mobilisation through the private placement route is that there are no regulations governing such offerings,” said a corporate source.

In the private placement market, both mobilisers and investors are mainly the institutions and this, therefore, in no way reflects any direct mobilisation of household savings as is the case in the primary capital market.

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It said government organisations and development financial institutions continued to dominate this market, mobilisinga high 77 per cent of the total amount. This represented an increase from its 75 per cent share in 1997-98 though a fall from 90 per cent in 1996-97, according to a Prime release here.

Among government organisations, the all-India financial institutions and banks led with a 46 per cent share (Rs 8646 crore) followed with a 24 per cent share by state level undertakings (Rs 4479 crore), Prime said. During the first six months, public sector enterprises (PSEs) could mobilise only six per cent of the total mobilisations to the tune of Rs 1,173 crore. Mobilisations worth Rs 200 crore by state financial institutions formed one per cent of the total.

A significant feature was the growing emergence of state level undertakings, most of which raised resources primarily for infrastructure, Prime pointed out. From a meagre Rs 311 crore in full 1995-96 and Rs 2630 crore in 1996-97, 1997-98 has seen the sector raise a high Rs 6726 crore.

In the first six months of 1998-99, these undertakings raised Rs 4479 crore. Themajor mobilisers were Maharashtra Krishna Valley Development Corporation (Rs 700 crore), Andhra Pradesh State Electricity Board (Rs 519 crore) and Maharashtra Jeevan Pradhikaran (Rs 513 crore).

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On the other hand there was a drop in the mobilisation of PSUs, down from Rs 5301 crore in 1996-97 to Rs 4008 crore in 1997-98 to only Rs 1173 crore in six months of 1998-99.