Kumar Mangalam Birla's Grasim gets cheapest rupee bond deal in 5 years

Synopsis

Grasim Industries Ltd. has secured its lowest-cost local-currency bond since June 2020, a sign that interest rate cuts and recent cash infusions by the Indian central bank are benefiting companies.

Grasim Industries Ltd. has secured its lowest-cost local-currency bond since June 2020, a sign that interest rate cuts and recent cash infusions by the Indian central bank are benefiting companies.

The flagship of billionaire Kumar Mangalam Birla plans to raise as much as 10 billion rupees ($117 million) selling a bond due in five years, according to people familiar with the matter. The note carries a coupon of 6.56%, they said, asking not to be identified as the information is private.

The Reserve Bank of India’s aggressive cash injections and two rate cuts have sparked a bond rally, driving yields on the top-rated three- and five-year corporate debt to their lowest levels since 2022. The ability to borrow at lower rates also shows the effective transmission of the central bank’s actions to the broader economy.

Other corporates are also tapping into the local bond market to take advantage of the lower borrowing costs. Jio Credit Ltd., a shadow lender owned by Asia’s richest businessman, Mukesh Ambani, is set to seek bids next week to raise three-year money at a 7.08% coupon. That’s 11 basis points lower than a similar tenor deal last week.

Axis Bank Ltd. is the sole arranger for Grasim, the people said. A representative at the company declined to comment.

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