Muthoot Finance plans floating-rate bond issue of Rs 2,000 cr

The paper will be priced 300 basis points above the 91-day treasury bill, said the people cited above. One basis point is a hundredth of a percentage point. The 91-day T-bill has increased 21 basis points to 5.50% this calendar year. The 10-year benchmark rate, by contrast, has increased 48 basis points to 7.08% as of Wednesday. Muthoot Finance plans to raise ₹2,000 crore next week. The company will issue three-year floating-rate bonds. These bonds are linked to the 91-day treasury bill. This move allows Muthoot Finance to avoid high fixed borrowing costs. Floating-rate bonds are gaining popularity as interest rates are expected to rise. The coupon will be reset every quarter, unlike fixed-rate bonds. The bond issue is being arranged by ICICI Securities PD and AK Capital. Muthoot finance did not respond to mailed queries by press time. "Fixed-rate corporate bond yields have risen amid expectations of a rate hike, prompting issuers to look for ways to avoid locking in borrowing costs at elevated levels," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, a debt advisory firm. "Many companies now are turning to FRBs, which are priced very competitively, with borrowing costs in some cases even coming in below comparable bank lending rates." FRBs gained traction as interest rates are expected to rise. Its coupon is benchmarked to 91-day T-bill, allowing issuers to avoid locking in elevated long-term yields. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price