MUMBAI, June 10: There is a deluge of privately placed debt issues with companies raising over Rs 3,050 crore from the capital market through privately placed debt issues in May 1997. These issues offered very low interest rates ranging from 13.5 % to 15.75 %.``During May 1997, 13 cases of private placement were observed which together were in the process of raising a massive Rs 3,050 crore. This was the highest amount raised through private placement in a single month,'' says the Centre for Monitoring Indian Economy (CMIE).The issuers included financial institutions, public sector companies and private sector companies.Among the large issuers of debt during May 1997 were Industrial Development Bank of India (Rs 1000 crore), Indian Railway Finance Corporation (Rs 500 crore) and Krishna Jala Bhagya (Rs 500 crore). In the private sector, Reliance Industries raised Rs 100 crore through 15.5 % bonds.Kotak Mahindra Primus sought to raise Rs 50 crore with 14.75 % debentures with a short maturity of two years. CMIE expects the glut in privately placed debt to continue. Private sector companies which have deferred their public issue plans owing to the depression in the secondary market, are expected to privately place debt.According to CMIE, the sharp increase in the number of private placement issues also signifies a structural change in the primary capital market. The conventional public issue route has virtually dried up with the number of public issues dropping to ten in May 1997.``The dominance of debt over equity began in 1996-97. Thus, the heavy resource mobilisation through debt was just a continuation of the past trends but the drop in the interest rates offered is a distinct regime shift,'' it said.
